Food delivery growth to stay flat q-o-q

Analysts expect 10-minute food delivery propositions to have minimal impact on the overall business

- Sowmya Ramasubramanian

Growth in food delivery margins for Eternal (formerly Zomato Ltd) and Swiggy is likely to have remained steady on a quarter-on-quarter basis in the fourth quarter of FY25 as signs of slowdown in the overall food delivery segment continued, analysts told Mint.

"Margins would have been flat in Q4 on a q-o-q [quarter on quarter] basis as it already saw sharp improvement in the previous quarter. We don't expect a similar massive improvement in margins in the near term," said Karan Taurani, analyst at Elara Capital. Swiggy is likely to see a sharper rise in margins than Zomato, according to Taurani.

Contribution margin is a key metric for profitability. Zomato's adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) in its food delivery business, which excludes Employee Stock Ownership Plan (Esop) costs, saw an improvement to 4.3% of gross order value (GOV), a key metric, in the December quarter from 3.5% in the previous quarter, driven by the hike in platform fee and other strategic calls.