After a major decline in shares of food delivery companies Jomato and Swigi, analysts now assume that this is the right time for investors to purchase them. He says that due to the major decline in share prices and evaluation, there is now enthusiasm about them. Although operational problems may last up to one or two quarters, the changing trend of such concerns has made shares attractive to shopping at current levels in terms of long-term.
ICICI Securities analysts say, “Investors fired Jomato and Swigi shares amid cash concerns in the Quick Commerce (QC) segment. But we believe that these concerns are looking very high in the prices of stocks as Swiggy is now trading at 30 percent less than the proper value of the food distribution business. On the other hand, Zomato is trading at a price that is nothing for Quick Commerce. We feel that this discrepancy is unlikely to remain for a long time.
In the calendar year 2025, Jomato’s stock has lost 19.62 per cent so far on BSE, while Swiggi’s stock has come down 33.29 per cent in the same period. In comparison, the Sensex has fallen by 3.44 percent. From its record high levels, Zomato shares fell 26.61 per cent and Swiggi’s stock has lost 41.55 per cent. Meanwhile, the BSE has come down 12.24 percent.
Quick Commerce: Hidden Rustom
Analysts believe that investors sold excessive cash and in view of strict competition in the Quick Commerce sector. In this race, Flipkart minutes and Amazon Now also joined the existing companies-Jomato’s blinkit, Swigy’s Instamart and Jepto (non-list).
JM Financial estimates that Quick Commerce Industry spending cash will be at the peak either in the March quarter of the current financial year or the June quarter of the next financial year. He believes that by then, industry-wide dark store and warehousing investment will be softened.
Food delivery: milch cow
Analysts hope that the Union Budget 2025 tax exemption will increase in consumption from the first quarter of FY 2026. He believes that this will increase the income of Jomato and Swigy in the next financial year.
Historically, consumption increased significantly in FY 2006, FY 2011, FY13 and FY14 when the budget deduction was announced in the budget. ICICI Securities believes that nature related nature of the food delivery sector can prove to be helpful as consumers will start seeing more disposable income from May 2025.
Keeping this in mind, Brokerage has repeated its ‘buy’ rating on Zomato and Swiggy and has kept the price target of Rs 310 and Rs 740. JM Financial has also rated the shares ‘Buy’ and the price of Zomato has set a target of Rs 280 and Rs 500 for Swigi.
First Published – March 19, 2025 | 11:02 pm IST
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