Synopsis: The article compares Swiggy and Zomato, highlighting HDFC Securities’ views on their growth, profitability, platform fee hikes, and operational momentum, emphasizing long-term financial prospects and expansion strategies.
The article compares Swiggy and Zomato, focusing on HDFC Securities’ assessment of their growth and profitability. It examines Swiggy’s expansion through Instamart, improving margins, and narrowing EBITDA losses, underlining the company’s capacity to invest in long-term growth.
Zomato’s performance is evaluated through strong operating momentum, rising order volumes, and Blinkit’s quick commerce expansion. Platform fee hikes further support profitability, highlighting the company’s potential for sustained financial growth and enhanced earnings visibility. Here are the food delivery stocks highlighted by HDFC Securities
Swiggy Ltd
Swiggy is a leading Indian on-demand convenience platform founded in 2014 and based in Bengaluru. It began as a food delivery service and has expanded to include Swiggy Instamart for groceries, Swiggy Dineout for dining out, and Swiggy Genie for hyperlocal deliveries.
With a market capitalization of Rs 72,140 crore, Swiggy Ltd’s shares are trading at Rs 261.30 per share, down by 1.94 percent from its previous close. The shares of the company have given a negative return of 24.5 percent over the last 1 years.
HDFC Securities sets a target of Rs 460 for Swiggy, indicating over 76percent upside. The bullish view is driven by the recent stock correction, strong Instamart growth, and narrowing EBITDA losses.
Rationale
Attractive Entry Point: HDFC Securities views Swiggy’s 37 percent correction over six months as an attractive entry point. Valued at roughly 32x FY28 EV/EBITDA, the brokerage expects the food delivery market to grow around 17 percent, with margins stabilising near 3 percent, supported by recent platform fee hikes of 17 to 19 percent.
Growth and Profitability Drivers: Instamart is projected to reach contribution margin breakeven by Q1 FY27, while adjusted EBITDA losses could narrow to about Rs 4.2 billion by FY28. A strong cash position further enhances Swiggy’s capacity to invest in growth and execute expansion plans, reinforcing the stock’s long-term upside potential.
Margin and Profitability Boost: Swiggy’s 17 percent platform fee hike is expected to improve margins, reduce adjusted EBITDA losses, and support long-term profitability, reinforcing the company’s ability to invest in growth and capture market share.
Eternal Ltd
Incorporated in 2010, Zomato Limited is one of the leading online Food Service platforms in terms of the value of food sold. Its offerings include food delivery, dining-out services, Loyalty programs, and others.
With a market capitalization of Rs 2,21,668 crore, Eternal Ltd ’s shares are trading at Rs 229.75 per share, down by 2.94 percent from its previous close. The shares of the company have given a return of 8.29 percent over the last 1 years.
HDFC Securities sets a target of Rs 340 for Eternal, implying about 47.98 percent upside. The bullish outlook is supported by improving profitability, rising order volumes, and strong earnings visibility, highlighting the company’s growth potential in the food delivery market.
Rationale
Growth Across Core Metrics: Zomato’s continued traction across key business indicators, with monthly transacting users, order volumes, and net order value rising 20 percent, 24 percent, and 18 percent year-on-year, respectively. Profitability trends are improving, supported by platform fee increases and benefits from operating leverage.
Blinkit Scale-Up and Earnings Visibility: Blinkit remains a key growth lever, delivering around 10 percent quarter-on-quarter growth in net order value while progressing toward breakeven, aided by plans to add 250 dark stores. Despite some execution gaps in quick commerce, losses in the going-out segment seem to have peaked, supporting a more favorable valuation outlook.
Margin and Profitability Boost: Zomato’s 19.2 percent platform fee increase is likely to enhance margins and profitability, strengthening earnings while enabling the company to sustain growth and improve financial performance in the competitive food delivery market.
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