One of the largest online food delivery companies in India, Swiggy, saw a massive depreciation in its stock price on January 21st, 2025. The stock value of the company decreased almost 11% down to ₹427, approximately 8 weeks low. The slump followed as its competitor Zomato reported drop financial results for the quarter that ended December 2024. This weak performance from Zomato raised an alarm among the investors who feared a much broader negative sentiment in the market, resulting in losses to the shares of Swiggy, also.
With 11% fall being recorded in day trade, this slump proved to be the most significant of falls the company has witnessed since its debut on November 2024. As a result of the present trading, the market price of Swiggy shares has come very close to what was offered under the company’s initial public offer at ₹420 per share. The stock is currently trading above the issue price of ₹390 by almost 11%. The fall reflects the growing skepticism created in the minds of investors about the food delivery sector and quick commerce (QC) as competition intensifies, and falls have begun hurting them in terms of bottom profitability for other companies.
Effects of Zomato Struggles on Swiggy’s Market Performance
The latest financial results, says Zomato in its quarterly report released on January 10, shows significant downturn in profits. The company declared a year-over-year -57.3% drop in the profit after tax (PAT) for the third quarter of the Financial Year 2025, which was at ₹59 crore. A significant part of this decline derives from the inclusion of many investments in dark stores and efforts for increased customers in the competitive quick commerce space.
Under this background, Blinkit, the company delivery segment, also served as Zomato’s dark losses catcher in its operations in the quarter. Blinkit stood at ₹103 crore of a total net loss, with no foreseeable profitability in the near term. The plan has been to grow Blinkit’s terms rather aggressively, targeting a maximum 2,000 stores by December 2025, a full year ahead of the initial commitment.
Performance related to weak financial activities from Zomato resulted in a reduction in the target price by analysts, thus causing a five-figure dip in the stock value realized at a month low of ₹207.80 per share. With the negative sentiment surrounding Zomato, Swiggy, to whom Zomato has been marketed, has also taken a direct blow.
Fast and Furious Fight in Quick Commerce
Quick commerce segment is a battlefield between Swiggy’s Instamart and several others all vying to rule their niche. Among them are Zomato, Swiggy, and early-stage Zepto, along with well-funded Flipkart and BigBasket (Walmart- and Tata-backed, respectively), all of whom are hoping to do well.
The pitch of battle is heating up in quick commerce, which mainly caters to ultra-fast grocery and essential deliveries being made and fulfilled within time frames of minutes, coupled with cash being heavily poured into such economies but profitability in the near term. Here is where everyone’s expenditure level could be observed.
All clocks factored in or overlooked, Swiggy is being inconspicuous to blaze trails in that narrow neck of uncertainty as it confronts the toughest market conditions. What is an investment guru’s position on this? Analysts said it was laundered in a comprehensive way across the landscape of the all-in-one app. It would allow for the full operational effects: using the same apparatuses for food delivery and delivery of grocery. What she posits as the answer is her thorough diplomatic mixtape in the food delivery segment-but largely in the hurry commerce industry.
Analyst Take: Many Silhouettes in Swiggy
The reality is that teeth-chattering currents are occurring in the short term in the markets. However, most analysts are still positive on Swiggy’s long-term prospects. There are very few players that champion quick commerce, like Swiggy going head-on with Instamart, along with a much clearer focus on one brand-placed service.
In a word, analysts are looking at Swiggy’s substantial movement in the volume growth 2024 trajectory vis-à-vis Zomato’s growth figures gradually stiffening.
However, Swiggy shares are valued less highly relative to Zomato. For instance, international brokerage firm UBS recently stressed that it has a Buy note on the counter; where 35-40% less premium accrues to the stock value reflected in Zomato. This, in the view of investors chasing the stocks for the long run, filters down to a very attractive investment opportunity in the industry.
However, the majority assert that quick commerce is a generational opportunity for the most part. The potential upside in the sector and the fact that e-commerce is a big disruptor in retail and grocery should see further expenditure next to it. Whilst tough in the near term financially, there is still very high confidence in the future of an industry that is evolving and maturing at the same time.
The trade fallout experienced recently may alarm short-term investors intending to invest in the company. However, it may well prove to be an advantageous long-term buying opportunity for potential investors. With such a strong position in the food delivery and quick commerce spheres of the companies, it is seen by analysts as a company likely to withstand most of the disaster, with long-term growth trends of the sector benefiting the company in the future.
Indeed, business investment should be done under caution because there is high completion in the quick commerce sector where it is also hard to achieve profitability even in the long run compared to the initial estimates. Much like any other investments, investors must perform due diligence and seek advice from properly certified financial experts.
Note: All views and recommendations are those of individual analysts and not those of Mint. Investors should seek the advice of properly certified experts before making investment decisions.