Swiggy needs Instamart to rev up

Swiggy Ltd's first post-listing quarterly results show that it has almost matched Zomato Ltd's growth on a quarter-on-quarter (Q-o-Q) basis.

- Manish Joshi

For the September quarter (Q2FY25), both companies saw about 5% and 24% growth in the respective gross order value (GOV) of the food delivery and quick-commerce businesses. However, the key differentiating factors are Swiggy's relatively smaller size and its loss at the adjusted EBITDA level. EBITDA stands for earnings before interest, taxes, depreciation and amortization.

In Q2FY25, Swiggy's GOV was ₹10,600 crore against ₹15,800 crore of Zomato in food delivery and quick commerce together. Swiggy's shares trade at 2.8x of the annualized GOV of Q2 versus Zomato's 4.1x.

Zomato's premium valuation may be simply attributed to its better profitability. Its adjusted EBITDA in Q2 in the two businesses was ₹333 crore, whereas Swiggy's was negative at ₹247 crore, mainly due to losses in its quick-commerce arm Instamart. If Swiggy shows it can catch up in terms of profitability, there is scope for the valuation gap to narrow.