India’s food-delivery sector is booming, with consumers increasingly opting for online ordering to satisfy their cravings. Two giants have captured this market: Swiggy and Zomato. As Swiggy prepares for its much-anticipated ₹11,000+ crore IPO, investors and industry watchers are eager to see how it will fare against its competitor, Zomato, which launched its own IPO in 2021. Here’s a closer look at the food-delivery market, key financial metrics for these companies, and Swiggy’s upcoming IPO details.
India’s Rapidly Growing Food-Delivery Market
India’s food-delivery industry has experienced explosive growth in recent years, with no signs of slowing down. Let’s look at how the market size has evolved and where it’s projected to head:
| Year | Market Size |
|---|---|
| 2018 | ₹10,000 Cr |
| 2023 | ₹60,000 Cr |
| 2028 (Est.) | ₹1,70,000 Cr |
This growth is fueled by increasing internet penetration, busy urban lifestyles, and evolving dining preferences among consumers. Both Swiggy and Zomato have managed to capture a significant portion of this market, becoming household names and shaping how Indians order food.
Market Share in FY24
In FY24, the market share for food delivery in India shows Zomato holding a slight lead over Swiggy:
Zomato: 58% | Swiggy: 34% | Others: 8%
This breakdown highlights the duopoly in India’s food-delivery landscape, with Zomato and Swiggy dominating the sector. Smaller players make up a minor portion, indicating how entrenched these two giants have become.
Key Financial Metrics (FY24)
The financial performance of Swiggy and Zomato in FY24 offers valuable insight into their operations and growth potential. Here’s a side-by-side comparison:
| Metric | Swiggy | Zomato |
|---|---|---|
| Gross Order Value | ₹35,271 Cr | ₹47,868 Cr |
| Operating Revenue | ₹11,247 Cr | ₹12,114 Cr |
| Total Expenses | ₹13,947 Cr | ₹12,670 Cr |
| Advertising & Sales | ₹1,851 Cr | ₹1,432 Cr |
| Employee Costs | ₹2,012 Cr | ₹1,659 Cr |
| Net Profit/Loss | -₹2,350 Cr | ₹351 Cr |
Profitability: While Zomato has achieved profitability with a net profit of ₹351 crore, Swiggy continues to record losses, posting a net loss of ₹2,350 crore in FY24. This profitability disparity may be a deciding factor for investors, especially those seeking returns in the short term.
Revenue Breakdown
Swiggy and Zomato have distinct revenue structures, reflecting their varied business strategies and priorities:
Swiggy’s Revenue Breakdown
- 80.65% from Food Delivery
- 14.42% from Quick Commerce (Instamart)
- 2.08% from Out of Home (Dineout)
- 2.84% from Other sources
Zomato’s Revenue Breakdown
- 57.53% from Food Delivery
- 23.42% from Hyperpure (B2B)
- 16.99% from Quick Commerce (Blinkit)
- 1.9% from Out of Home
- 0.16% from Other sources
Zomato’s B2B arm, Hyperpure, makes up a significant part of its revenue, diversifying its income streams. Swiggy, on the other hand, derives a larger percentage of its revenue directly from food delivery. Both companies are investing in “Quick Commerce” — Swiggy through Instamart and Zomato through Blinkit — to capture the rapidly growing demand for speedy grocery deliveries.
Swiggy’s ₹11,000+ Cr IPO: Key Details
Swiggy’s IPO is one of the most anticipated events in the Indian stock market this year. Here’s what you need to know:
- IPO Dates: 06th Nov 2024 – 08th Nov 2024
- Price Range: ₹371 – ₹390 per share
- Lot Size: 38 shares
Swiggy’s IPO is valued at an impressive ₹95,000 crore, and the company aims to use the funds for growth and expansion.
IPO Split
Swiggy’s IPO proceeds will be allocated as follows:
| Type | Amount | Percentage |
|---|---|---|
| Offer for Sale | ₹6,828 Cr | 60.28% |
| Fresh Issue | ₹4,499 Cr | 39.72% |
Most of the IPO funds will be allocated towards an “offer for sale” by existing promoters, with the remaining coming from a fresh issue of shares. This split intends to provide liquidity to early investors while raising fresh capital to fuel Swiggy’s future growth plans.
The Road Ahead: Challenges and Opportunities
Swiggy’s IPO comes at a time when the company faces both significant challenges and promising opportunities:
- Profitability Concerns: Swiggy is still incurring losses, while Zomato has managed to turn a profit. Investors may view this as a risk, especially given Swiggy’s high operational expenses.
- Quick Commerce and Diversification: Swiggy’s investment in Instamart shows its ambition to capture the growing Quick Commerce market, where Zomato’s Blinkit is a strong competitor. However, Swiggy’s limited B2B income compared to Zomato’s Hyperpure might be a disadvantage in terms of revenue diversification.
- Market Growth Potential: The Indian food-delivery market is projected to nearly triple in size by 2028, giving Swiggy and Zomato ample room to expand. Swiggy’s strong brand presence, customer loyalty, and innovative offerings may help it capture an increasing share of this growing market.
- Competitive Pressure: The battle with Zomato is fierce, and both companies are expected to continue investing heavily in marketing, technology, and logistics. The competitive pressure may impact Swiggy’s ability to achieve profitability in the near term.
Conclusion: Is Swiggy’s IPO Worth Considering?
Swiggy’s upcoming IPO presents an exciting opportunity for investors to gain exposure to India’s booming food-delivery market. The company has established itself as a market leader, backed by a robust brand and loyal customer base. However, Swiggy’s continuing losses and high expenses could raise concerns for some investors, especially when compared to Zomato’s profitability.
For investors with a high-risk tolerance who believe in the long-term growth potential of India’s food-delivery industry, Swiggy’s IPO could be an appealing opportunity. However, those looking for short-term gains may view Zomato as a safer choice, given its established profitability.
Ultimately, Swiggy’s IPO offers a unique chance to participate in one of India’s most dynamic sectors, with both significant growth potential and notable risks. As the Indian food-delivery market continues to evolve, Swiggy’s IPO may just be the beginning of a new era in how Indians dine and shop online.