Swiggy, a leading player in India’s food delivery industry, is making waves as it competes closely with Zomato, creating a stronghold in this thriving market. With projections indicating that Swiggy’s Gross Merchandise Value (GMV) could soar to $3.4 billion by the end of the fiscal year 2025, the company’s growth trajectory is nothing short of impressive. Jefferies has recently initiated coverage on Swiggy Ltd., issuing a ‘Hold’ rating and setting a target price of Rs 400, underscoring the firm’s robust foothold in the hyperlocal sector.
Dominating the Food Delivery Market
Swiggy currently commands a 45% share of the Indian food delivery market, positioning itself for substantial growth in the coming years. According to Jefferies, the company is anticipated to achieve high-teens growth in this segment, coupled with an expansion in profit margins. This optimistic outlook is bolstered by expected enhancements in margin efficiency, driven by increased take rates and a reduction in discounts.
- Projected GMV for Swiggy: $3.4 billion by FY 2025
- Market share in food delivery: 45%
- Expected EBITDA growth: 72% CAGR from FY 2025-2027
Exploring Quick Commerce Opportunities
In addition to food delivery, Swiggy’s Instamart segment is poised for significant growth, with forecasts indicating a GMV of $2 billion. However, it’s important to note that the quick commerce arena is fierce, with competitors like Zomato’s Blinkit and Zepto vying for market share. Despite the potential, Swiggy’s quick commerce operations continue to face challenges, as they are expected to operate at a loss through fiscal year 2026, with hopes for improvements by fiscal year 2027.
Competitive Landscape
The entry of major e-commerce players such as Flipkart and Amazon into the quick commerce space is likely to heighten competition further. This competitive pressure may impact Swiggy’s profitability, which is projected to remain under strain during the coming years.
- Current profitability status: Negative EBITDA and cash flow expected through FY 2027
- Medium-term outlook: Cash positive
Conclusion
While Swiggy has established itself as a formidable entity in the Indian food delivery market, challenges remain, especially in the rapidly evolving quick commerce sector. Jefferies’ cautious stance reflects the inherent risks tied to competition. As the market continues to develop, Swiggy’s strategic maneuvers will be crucial in navigating these turbulent waters.
For more insights into the competitive dynamics between Swiggy and Zomato, check out our detailed analysis on platform fees and profitability strategies.
