Swiggy trails Zomato in both gross order value and profitability metrics, although improvements have been noted in its financial performance, as per Morgan Stanley's analysis of the IPO-bound quick-commerce platform's Draft Red Herring Prospectus.
Swiggy Ltd. currently operates in 681 cities for food delivery, but Zomato Ltd. has expanded its market share from 54% in financial year 2022 to 58% in the first quarter of financial year 2025, the brokerage noted.
While Swiggy's GOV per monthly active user is better, its overall metrics are still catching up, with contribution margins 100 basis points lower than Zomato's. For instance, Swiggy's adjusted Ebitda margins stood at just 0.8%, compared to Zomato's 3.4% in the first quarter of financial year 2025, the brokerage noted.
In the rapidly growing quick commerce sector, Swiggy's presence in 32 cities has not translated to profitability, with contribution margins at -3.2% against Zomato's Blinkit, which boasts positive margins. This disparity reflects the need for Swiggy to enhance its average order value and improve take rates to achieve better margins, Morgan Stanley said.
The primary focus of Swiggy's capital raise is to bolster its quick commerce operations and enhance its technology and infrastructure. The DRHP indicates a significant market growth potential, with the online food delivery and quick commerce markets projected to grow at CAGRs of 42% and 148% respectively, between 2018 and 2023, the brokerage noted.
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