Zomato Vs Swiggy: Macquarie Compares Food Delivery, Quick Commerce Biz

4 min read Last Updated : Oct 16 2024 | 10:50 AM IST

Zomato vs Swiggy IPO, Macquarie report: Ahead of food aggregator Swiggy‘s likely initial public offering (IPO) in November 2024, brokerages have been drawing Swiggy’s comparisons with its close rival and listed player Zomato to judge which stock is a better bet for investors.

Global brokerage Macquarie is the latest to join the league. For easier comparison between Zomato and Swiggy, analysts at Macquarie have divided and analysed the two companies’ ‘food delivery’ and ‘quick commerce’ verticals.

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Swiggy, Macquarie said, seems to be 4-6 quarters behind Zomato in food delivery and quick commerce.

“For Swiggy, the path to catch-up in food delivery is relatively more straightforward, while that for quick commerce is more complex,” it pointed out in its latest report titled ‘Head-to-Head: Zomato versus Swiggy’.

For the unversed, Swiggy aims to raise up to Rs 3,750 crore via fresh issue of shares, coupled with offer for sale (OFS) for up to 185,286,265 equity shares (185.28 million equity shares) of the company.

Swiggy IPO date, Swiggy IPO lot size, and price bands have not been announced yet.

Zomato vs Swiggy: Quick Commerce

According to Macquarie, Zomato’s quick commerce app ‘Blinkit’ is much ahead of Swiggy’s ‘Instamart’ in terms of monthly transacting users (MTU), average order value (AOV), Efficiency (based on higher dark store throughput), and Take-Rate (higher ads, direct brand sourcing).

Macquarie’s analysis shows that both, Blinkit and Instamart, had similar MTUs at the end of financial year 2022-23 (FY23), roughly in the range of 3 million.

Blinkit, however, has marched well ahead of Swiggy Instamart with 7.6 million MTUs at the end of Q1-FY25 compared to the latter’s 5.2 MTUs.

In terms of number of orders, Blinkit is expected to close FY25 with 400 million orders, growing at a compounded annual growth rate (CAGR) of 40 per cent between FY24-28.

Swiggy Instamart, meanwhile, is seen closing FY25 with little over 200 million orders.

Further, Blinkit’s AOV is roughly 25 per cent above other peers due to higher contribution from Delhi NCR with higher non-grocery share (key reason for current better-than-peers unit economics), Macquarie noted. The brokerage pegs Blinkit’s gross order value for FY25 at around $3 billion vs Instamart’s little over $1 billion.

“Blinkit has Rs 25 per order or 4 per cent contribution margin (CM) in the quick commerce segment versus Instamart’s negative margin (-15 per cent in Q1FY25). Blinkit is helped by higher AOV, take-rate (ads, direct sourcing), customer fees, and lower opex,” Macquarie noted in its report.

All else equal, if Instamart’s AOV improves to Rs 600, then its contribution margin would breakeven; in addition, for adjusted Ebitda to breakeven, GOV needs to catch-up along with higher take rate and customer fees, the brokerage said.

Zomato vs Swiggy: Food Delivery

According to Macquarie’s analysis, Zomato’s food delivery segment had 20.3 million MTUs at the end of Q1 FY25 as against Swiggy’s 14 million MTUs. This difference of 31 per cent has been consistent since FY23.

Total FD orders for Zomato was 218 million at the end of Q1 in the current financial year vs Swiggy’s 156 million. AOV for Zomato, however, was Rs 425 per order vs Swiggy’s Rs 436 per order.

Given this, Zomato’s GOV stood at $1,116 million at the end of Q1 FY25 vs Swiggy’s $820 million; Zomato Food Delivery Revenue was $234 million compared to Swiggy’s $183 million; and Adjusted Ebitda margin(as a percentage of GOV) was 3 per cent for Zomato relative to 1 per cent for Swiggy.

Macquarie said Swiggy could reach 4-5 per cent adjusted Ebitda margin by lowering delivery costs.

“Amid similar AOVs, Zomato’s GOV for FY25 is estimated to be $4.8 billion, with a likely growth CAGR of 16 per cent between FY24-28. Swiggy lags on GOV by roughly 25 per cent or by about six quarters at the current pace of growth,” Macquarie said.

First Published: Oct 16 2024 | 10:49 AM IST