Swiggy has declared its quarterly earnings, and it doesn’t look good on the bottom line. The management outlined that, just like the previous quarter, the expansion in dark stores is one of the main reasons behind the steep decline in profitability. The going hasn’t been that great in the overall Quick commerce space. Even Zomato’s Q4 net profit dipped, citing similar reasons: dark store expansion. As the earnings of both companies are out, it’s the perfect time to compare them and understand which stock offers better value at current levels.
Swiggy Vs Zomato: Q4 result analysis
Swiggy’s Q4 result
The company with a market capitalisation of more than Rs 77,000 crore has reported a net loss of Rs 1,081.18 crore in Q4 FY25, doubling from a net loss of Rs 553.70 crore posted in the same quarter a year ago. However, the company’s revenue jumped 45% year-on-year to Rs 4,410.02 crore. One of the key metrics, gross order value, increased by 17.6% YoY.
Zomato’s Q4 results
Eternal, which was formerly known as Zomato, reported a huge dip in net profit to Rs 39 crore, falling by 77.71% YoY compared to Rs 175 crore in Q4FY24. However, the company posted revenue from operations at Rs 5,833 crore, up 63.76% as against Rs 3,562 crore reported during the fourth quarter of the previous financial year. The company’s food delivery GOV grew by 16% YoY, a fall of 1% Q-o-Q, while its net order value increased by 14% YoY and recorded a fall of 3% Q-o-Q.
Swiggy Vs Zomato: Management outlook
Swiggy CEO sees losses to unwind post Q4
“We believe that Instamart reached the peak of adjusted Ebitda losses in late Q4, and from hereon, we expect to progressively unwind losses, the pace of which will be determined by our expansion of AOV (average order value) and take-rates, and the nature and quantum of competitive intensity,” said the company’s founder and group CEO, Sriharsha Majety.
Zomato believes competition to remain intense
Deepinder Goyal, Founder and Chief Executive Officer of Eternal said, “Competition in food delivery has always been high, and the intensity of it hasn’t changed in the last quarter. Our market share has been stable for the last few months, and we are hoping we can drive some share gain going forward.”
Swiggy Vs Zomato: Brokerage views
JM Financial on Swiggy
Coming to the brokerage houses’ views, JM Financial said that Swiggy’s earnings were once again a story of contrasting performances in food delivery vis-à-vis Instamart (quick commerce) businesses. While it reported market-leading GOV growth alongside strong margin gains in food delivery, its GOV grew 101% YoY in Instamart, meaningfully slower than the market, with profitability deteriorating more than anticipated. This, along with a sequential increase in ESOP costs, led to the consolidated EBITDA loss expanding. The brokerage has a ‘Buy’ call on the stock with a target price of Rs 450, an upside of 44% from the market price of Rs 313.
Nuvama on Zomato post Q4 results
Post the Q4FY25 earnings, the international brokerage firm, Nuvama Institutional Equities, trimmed the target price slightly to Rs 280 from Rs 290 to factor in lower near-term profitability in the quick commerce business of Zoamto. The company has a cash balance of Rs 18,800 crore at the end of the fourth quarter of FY25. Nuvama sees it as a positive for the company, not burning cash at the EBITDA level. However, if the company’s lower profitability extends for a longer duration, it could be risky.
Swiggy Vs Zomato: Stock performance
Swiggy
Swiggy’s share price has fallen more than 6% in the last five trading days. It has erased over 5% in the past one month and 31% in the last six months. The stock price of Swiggy has corrected 26.5% since the day of listing, November 2024.
Zomato
The share price of Zomato has risen almost 2% in the last five trading days. It has given a return of 6% in the last one month. However, the stock has fallen 8% in the last six months. It has increased by more than 16% in the previous one year.