Market fall puts Zomato, Swiggy on investor menu

Analysts say stock slump has over-baked quick-commerce risks

- NIKITA VASHISHT

After a massive selloff in the shares of food delivery giants Zomato and Swiggy, analysts believe the time may be right for investors to start adding these stocks to their portfolio carts.

Their optimism, they say, stems from the sharp correction in stock prices and valuations, which seem to have "over-baked" concerns about the two companies. While operational challenges may persist for the next one to two quarters, analysts argue that the transitory nature of these concerns makes the stocks a compelling "buy" at current levels from a long-term perspective.

"Investors have dumped Zomato and Swiggy shares amid concerns about cash burn in the quick commerce (qcom) segment. However, we believe these concerns have been over-baked into stock prices, as Swiggy (consolidated) is now trading at a 30 per cent discount to the par value of its food delivery business, implying a negative value for qcom. Zomato, on the other hand, is trading at a value that ascribes nothing to qcom. We think this anomaly is unlikely to persist," analysts at ICICI Securities said.