Swiggy vs Zomato: Must you apply for Swiggy IPO or purchase rival Zomato shares? Analysts weigh in

The extremely anticipated preliminary public providing (IPO) of on-line meals and grocery supply large Swiggy is ready to debut on Dalal Avenue on November 6, aiming to lift roughly ₹11,327.43 crore from the first market. Swiggy IPO includes a contemporary difficulty of 11.54 crore fairness shares value ₹4,499 crore and an offer-for-sale (OFS) part of 17.51 crore shares valued at ₹6,828.43 crore.

On the upper-end of the value band of ₹371 to ₹390 per share, Swiggy IPO will worth the Softbank-backed firm at $11.3 billion, barely greater than its valuation over the past funding spherical in 2022.

Market observers are drawing comparisons between Swiggy and its listed peer Zomato, which went public in July 2021 with a market capitalisation of practically $13 billion ( ₹1.07 lakh crore). Since its itemizing, Zomato’s market cap has greater than doubled, reaching over $25 billion ( ₹2.14 lakh crore) as of November 2024.

Zomato has established its market dominance and turned profitability as towards Swiggy incurring losses for the final three reported monetary years. Zomato can also be prone to preserve a valuation benefit and has proven superior efficiency metrics throughout common order worth (AOV), gross order worth (GOV), and profitability within the meals supply section.

Buyers now ponder whether they need to apply to the Swiggy IPO or purchase Zomato shares, which has proven a good monetary efficiency.

Swiggy Vs Zomato: What to purchase?

In response to Akriti Mehrotra, Analysis Analyst, StoxBox, Zomato has a aggressive benefit because of its dimension, profitability, and higher progress indicators.

“Zomato reveals greater market traction with a strong gross order worth CAGR of 23.0% versus Swiggy’s 15.5%. Its common order worth progress additionally surpasses Swiggy’s, underscoring its operational effectiveness. Though the upcoming Swiggy IPO affords an opportunity for growth, it’s unclear how properly will probably be ready to make use of its assets to shut the hole with Zomato. Swiggy’s capability to extend the dimensions of its baskets for quick commerce and broaden its darkish retailer footprint will likely be essential to the success of its IPO, which could have a big effect on its market share and profitability,” stated Mehrotra.

Within the medium time period, Mehrotra believes Zomato is a extra interesting different for buyers as a consequence of its favorable key efficiency indicators and proven monitor document. Nonetheless, Swiggy may grow to be a severe competitor if it efficiently completes its IPO and reveals a transparent progress technique.

Coining related views, Anshul Jain, Head of Analysis at Lakshmisgree Funding and Securities stated that Zomato is best positioned by way of profitability and suggested buyers to desire Zomato shares over Swiggy IPO.

“A significant portion of Swiggy IPO includes OFS, giving exit to early buyers at excessive costs. Swiggy has been incurring losses and there may be uncertainty round its profitability. Alternatively, Zomato is a comparatively extra steady and worthwhile firm. You’re getting Zomato shares, a worthwhile firm, on the similar valuation to loss-making Swiggy. Therefore, it’s advisable to keep away from investing in Swiggy IPO and fairly purchase Zomato shares, which have greater income and revenue readability,” stated Anshul Jain, Head of Analysis at Lakshmisgree Funding and Securities.

Jain has a Zomato inventory worth goal of ₹550 apiece for a two-year perspective.

Jathin Kaithavalappil, Assistant Vice President, Alternative Broking stated that the Swiggy IPO valuation is well-priced, however Swiggy is reporting losses and its money flows are adverse.

“Swiggy additionally faces stiff competitors from Zomato, amongst others. Swiggy instructions about 45% market share in meals supply, however solely about 25% in fast commerce. Due to this fact, there may be uncertainty surrounding Swiggy’s approach to profitability. Zomato is providing confirmed scale and profitability with stable metrics, similar to gross order worth (GOV) and common order worth (AOV), which makes it the extra steady alternative within the quick time period,” stated Kaithavalappil.

Talking on whether or not buyers ought to apply for Swiggy IPO or purchase Zomato shares, Kaithavalappil suggested to go obese on steady Zomato and cautiously put some capital in the direction of Swiggy hoping it grows properly post-IPO.

Zomato Inventory Worth

Zomato shares has been underneath strain not too long ago, however has given respectable returns since its itemizing. Zomato inventory worth is down greater than 11% in a single month, however has rallied over 23% up to now six months. Zomato shares have jumped greater than 95% year-to-date (YTD) and have given multibagger returns of 109% in a single yr and over 285% in two years.

Disclaimer: The views and proposals made above are these of particular person analysts or broking corporations, and never of Mint. We advise buyers to test with licensed consultants earlier than making any funding choices.