What does Rapido's foray into food delivery mean for Zomato and Swiggy?

Rapido enter food delivery segment; what does its imply for Zomato (Eternal) and Swiggy shares? Elara Capital decodes

Rapido, known for its bike-cab services, is gearing up to enter the food delivery space. The mobility startup has formed a non-exclusive partnership with the National Restaurant Association of India (NRAI), which represents more than 50,000 restaurants nationwide. The pilot launch of "Ownly" is scheduled to begin in select parts of Bengaluru by the end of June or early July. 

How is Rapido's entry different from ONDC, Ola, and other direct ordering platforms?

Unlike previous entrants such as ONDC, Ola, and other direct-ordering platforms—which have struggled to scale due to limited last-mile control and reliance on third-party logistics—Rapido’s approach is structurally different, according to Elara Capital.

 

 

Rapido already has a 4 million-strong rider network, with 3–3.5 million daily rides, providing a significant logistical backbone. The startup plans to utilise idle rider time during meal hours for food delivery, requiring minimal additional investment and potentially improving rider earnings.

 

With prior experience delivering food for ONDC, Rapido also aims to lower customer acquisition costs by cross-selling food delivery services to its existing ride user base. A dedicated captain’s app is expected to consolidate ride, parcel, and food delivery tasks, with intelligent algorithms assigning jobs to maximise earnings and minimise travel distance.

What does Rapido's entry into food delivery mean for Swiggy and Zomato (Eternal)?

Elara Capital believes that Rapido’s entry could disrupt the Zomato-Swiggy duopoly. Here’s why the brokerage sees Rapido as a credible threat:

 

Lower commission structure 

Rapido is expected to charge a commission rate of 8-15 per cent from restaurant partners based on average order value (AOV) which is significantly lower than Zomato and Swiggy’s 21–22 per cent blended rates.

 

Strong rider base 

Rapido is entering the food delivery space, cross-utilising its 4 million rider network with 3.3 million daily rides as compared to Zomato's ride base of  0.44 million and Swiggy’s 0.53 million.

 

Sharp scale-up and profitability risk

Swiggy and Zomato are targeting 5 per cent adjusted Earnings before interest, tax, depreciation and amortisation (Ebitda). However, a sharp scale-up by Rapido, especially with aggressive subsidies, could disrupt the stable operational environment, trigger a pricing war, and threaten profitability, according to Elara Capital.   In response, Elara expects Swiggy and Zomato to take a measured approach to protect margins if Rapido’s aggressive strategies come into play.

 

The size of the food delivery market was at $9.5 billion in CY24 and was built on heavy advertising and promotion (A&P) spending in its early days, yielding a mature platform. Zomato alone spent around $400 million on A&P between FY20 and FY22 to build its platform and user base.

 

As the market is now relatively mature, Rapido may not need to spend as much to enter and scale, especially if it leverages existing demand and infrastructure.

Impact of Rapido's entry on Zomato's and Swiggy's share price:

In the past two days, shares of Zomato have lost around 2 per cent and Swiggy over 4 per cent. 

 

Going forward, Elara will monitor Rapido’s performance given its logistics edge and if Rapido gains significant traction and pressures revenue growth or multiples in the food delivery segment, Eternal’s (Zomato's) target price could drop by 6–12 per cent in bearish scenarios.

 

Currently, Elara has a target of ₹300 per share on Eternal. However, if gross order value (GOV) growth or valuation multiple drops by 200 basis points or 10 per cent—to 17 per cent growth and 50x multiple—the target could fall by 6 per cent to ₹282 per share.

 

Further in a worst-case scenario, if the GOV growth declines to 15 per cent and multiple de-rating to 44x, the target price could take a 12 per cent hit to ₹263 per share.

What risks can Rapido face in entering the food delivery space?

Despite leveraging its fleet across services, Rapido may face challenges in service speed and reliability, especially less than 30-minute delivery expectations.

 

Swiggy (via BOLT) and Zomato (formerly Quick) have invested in real-time fulfillment models — something Rapido could struggle to match without operational overhaul, as per Elara.