Zomato and Swiggy Shares Drop Amid Rising Competition: What’s Next?
Zomato and Swiggy are facing a tough time, with their stock prices falling by up to 23% from recent highs. Analysts attribute the decline to intensifying competition from players like Zepto, DMart, Flipkart Minutes, and the looming threat of Amazon entering the quick commerce (QC) sector.
Both companies have aggressively expanded their dark store operations, which has led to soaring costs such as higher rent, product discounts, and free delivery offers. These rising expenses could impact their contribution margins and overall profitability, fueling concerns over the long-term sustainability of their QC businesses.
According to JP Morgan, the market is factoring in flat EBITDA margins for Zomato’s QC business through FY26 and a further decline by FY27. The valuation for Swiggy also suggests that the company may miss its break-even target for QC by December 2025 and face persistent losses until FY27.
Despite these worries, analysts remain cautiously optimistic about the sector's growth, citing QC's potential to disrupt traditional retail and Blinkit's progress in breaking even.