According to a recent report by global trading company CLSA, food delivery behemoth Zomato is riding high. Zomato is expected to surpass Swiggy in crucial growth areas, according to analysts. In light of this optimistic forecast, CLSA has set a price objective of Rs 248 for Zomato shares, which could result in a gain of more than 24%.
How Is Zomato Expanding Its Business?
Several variables that have contributed to Zomato’s lead are highlighted in the report:
Including both meal delivery and fast commerce, Zomato’s total order value increased by a remarkable 36% year-on-year in FY24. This is a far better result than Swiggy’s 26% increase over the same time frame.
Boost Your Income: Zomato is processing more orders and making more money. While Swiggy’s adjusted sales increased by a relatively modest 24% year over year, the company’s adjusted revenue increased by an impressive 55.9%.Food delivery services are dominant. It appears like Zomato has the upper hand even in their main industry of meal delivery. In comparison to Swiggy’s double-digit growth for FY24, Zomato’s food delivery arm had a strong 22% YoY increase. This disparity, according to analysts, will probably persist even if Swiggy’s future meal delivery value grows by 10% to 20%.
Strength of the Delivery Network: Compared to Swiggy’s 387,000 active delivery partners, Zomato’s network is far broader at 418,000. More dark shops (warehouses for fast delivery) are available through Zomato’s Blinkit than through Swiggy Instamart.
Will You Face Any Obstacles Along the Way?
Despite the positive signs, CLSA has identified a few possible obstacles for Zomato:
Cautious customers: If urban customers cut back on spending, it might slow growth.
Cutthroat competition: Swiggy and other firms are continuously fighting for a share of the Indian food delivery industry.
One potential obstacle that the sector may face is the ever-changing regulatory landscape.
If the Open Network for Digital Commerce (ONDC) gains popularity, it might have an impact on Zomato’s commission rates (take rates).
Clara is nevertheless bullish about Zomato’s future, highlighting its advantage over Swiggy, despite these possible obstacles. According to their target price, Zomato’s stock has a lot of potential for growth.
At the moment, a share of Zomato is worth Rs 202.20, representing a 1.68% increase. The BSE Sensex increased by 0.34%, reflecting a generally favorable market attitude.
