Zomato keeps its lead over Swiggy, gross merchandise value jumps 26%

In its annual report earlier this week, Prosus - Swiggy's biggest investor with a 33 per cent stake in the company - indicated that Swiggy's losses jumped 80 per cent year-on-year (YoY) between Jan 1-

Online food delivery platform Zomato maintained its lead over rival Swiggy with a 55 per cent market share in the food delivery space in calendar year ended December 31, 2022 (CY22), compared with Swiggy’s 45 per cent, according to a note by Kotak Institutional Equities released on Thursday.

Zomato’s gross merchandise value (GMV) for its food delivery business came in at $3.2 billion, up 26 per cent year-on-year (YoY).

Swiggy’s GMV for its core food delivery business came in at $2.6 billion, up 26 per cent YoY, while the GMV of its grocery delivery arm Instamart increased 459 per cent YoY.

Moreover, the food delivery order growth of 30 per cent YoY was ahead of its GMV growth at 26 per cent, indicating a decline in either average order value (AOV) or take rates, a trend that was not witnessed by Zomato. Take rates refer to the commission charged by the platform (like Swiggy or Zomato) for transactions that are facilitated by it.

 “This suggests a GMV share of 55:45 in favour of Zomato, reflecting strong execution and customer stickiness, despite discounts coming off on the platform. Further, Zomato seems to have maintained its market share lead in CY2022, which is an added positive,” analysts at Kotak said.

In its annual report earlier this week, Prosus – Swiggy’s biggest investor with a about 33 per cent stake in the company – indicated that Swiggy’s losses jumped 80 per cent YoY between January 1 and December 31, 2022, while the GMV for its food delivery business grew 26 per cent.

“Our share of Swiggy’s trading loss increased to $180m (FY22: $100m), driven by investment in Instamart, which peaked during the year,” Prosus had said. This translates into an overall loss of around $545 million for the food aggregator during the year.

 “We believe both Zomato and Swiggy are currently annualising GMV of over $1 bn. Swiggy posted YoY growth of 459 per cent in quick commerce GMV, and we believe future growth in it would be more calibrated, given a higher profitability focus. Zomato’s losses appear lower over the same period. However, we note that the Blinkit acquisition was completed only in August 2022, and hence the comparison is not like-for-like,” said Kotak analysts.

Citing Swiggy CEO Sriharsha Majety’s recent announcement of achieving Ebitda profitability in the food delivery business, Kotak analysts said, it was positive and that competitive intensity in the sector was more rational than before.