Zomato or Swiggy Stocks for Portfolio:There is movement in the food delivery space now. In this space, after Zomato, now another listed player Swiggy has also come in the market. Swiggy has had a positive listing in the stock market and the share remains above its IPO price. Zomato’s stock remains among the top gainers of this year. At present, investors are now seeing two great investment options in food delivery and quick commerce space. The question is which stock is showing more strength considering the current fundamentals. Which stock should investors buy now for higher returns?
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Brokerage House on Swiggy
Brokerage house Motilal Oswal has started coverage on Swiggy stock and has given a target of Rs 475 with Neutral rating, which is 13% more than the current price. The brokerage says that Swiggy’s unified platform has become essential for urban consumers, which covers everything from food delivery to grocery needs in a single app. Leveraging a unique mix of convenience, high-frequency offerings and user stickiness, Swiggy stands out in the competitive environment. While Zomato is currently the leader in the food delivery and quick commerce business, Swiggy’s all-in-one app strategy enables stronger cross-utilization across services and better operational efficiency.
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Brokerage house Motilal Oswal says Quick Commerce is a transformative opportunity, giving Swiggy a chance to redefine how Indian consumers shop for essentials and other goods. The brokerage believes that Swiggy has the potential to be among the top 3 players in this fast-growing market segment due to the demand for fast and convenient delivery services. Overall, Swiggy is well positioned to capitalize on this growth by expanding its customer base, increasing order volumes and values, and improving its unit economics and profitability.
Brokerage house HDFC Securities has given Add rating on Swiggy and a target of Rs 430. According to the brokerage, Swiggy has a strong brand presence and strong user base. The brokerage has highlighted the company’s strong growth prospects in Quick Commerce. However, it has also said that operational constraints may affect its long-term profitability trajectory.
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Brokerage House on Zomato
Brokerage house Morgan Stanley believes that in the bull case the share price can double from the current price in less than the next 3 years. Whereas in the base case the shares can double in 5 years. At present, the brokerage has kept the target price of the share at Rs 355 for the near term. This is 32 percent more than the current price. The brokerage house has listed some special reasons due to which the fundamentals of Zomato appear strong and this new age stock can show huge growth in the coming days.
Brokerage house Motilal had given Buy rating on Zomato in a recent report and has kept the target price at Rs 330. The brokerage says that while the company’s food delivery business is stable, Blinkit provides a generational opportunity to participate in the disruption of industries like retail, grocery and e-commerce. The brokerage’s estimates are largely unchanged, as growth in Blinkit GO as a result of dark store network expansion has been offset by a decline in profitability due to increased capex and investments. It is estimated that Zomato’s PAT margin may be 4.7%, 8.6% and 12.9% in FY25, FY26 and FY27.
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Which 7 factors are supporting Zomato
1. Quick commerce market may accelerate due to category expansion and wallet share gains.
2. Despite high competitive intensity in the near term, we expect Zomato to remain the market leader and capture a greater share of the industry profit pool.
3. It is expected that Zomato will maintain its 40% market share despite increasing competition.
4. The stock in the Quick Commerce business is priced at Rs 120/share, which we think is conservative.
5. Zomato’s strong balance sheet and ability to withstand competitive pressures puts it ahead of its competitors.
6. The company’s food distribution business also remains strong, based on a loyal customer base and solid operating metrics.
7. The company’s margin may remain at 2.2% till F2027 and 5.1% till F2031. Which indicates an annual profit pool of around 1 billion US dollars for this business.
(Source: Morgan Stanley)
(Disclaimer: The view or advice on the share is given by the brokerage house. These are not the personal views of Financial Express. There are risks in the market, so take expert opinion before investing.)
