Whalesbook
Growth Drivers: More Orders, Wider Reach
India's online food delivery market is growing by focusing on customer loyalty through more frequent orders and reaching Tier-2 and smaller cities. The sector is projected to expand from around $9 billion in 2024 to nearly $27 billion by 2030, a 19% annual growth rate. This growth is supported by India's urbanization, rising digital use, and consumer preference for convenience. Smaller households and younger workers are ordering in more, while better restaurant networks and logistics improve delivery.
Quick Commerce Competition Heats Up
The fast expansion of quick commerce is intensifying competition, demanding scale and sharp execution. Investec calls this a "survival of the fittest" market, forecasting over 40% annual growth through FY30 despite high capital needs. Zomato's Blinkit is a leader, with Investec noting it's years ahead of Swiggy's Instamart in development due to its scale and better unit economics. Blinkit reportedly cut its losses by 92% in FY25. Swiggy's Instamart, however, saw its losses increase by 60% despite growing sales. Blinkit held an estimated 46% quick commerce market share by Q1 FY25, well ahead of Swiggy Instamart's 25%, though Swiggy's Gross Order Value per user is competitive.
Profitability Puzzles Amid High Valuations
Key questions remain about profitability and market valuations. Zomato shows a wide range of P/E ratios, with estimates from 97.6 to over 1700 by late 2025. Its market cap was between $21.55 billion and $22.87 billion USD in April 2026. Zomato reported a net profit of ₹527 crore in FY25, up year-on-year. Its food delivery adjusted EBITDA margin rose to 2.8% in FY24 from -18% in FY21, showing a long road to steady profits. Swiggy generated ₹15,227 crore in revenue in FY25 but lost ₹3,117 crore. Its food delivery EBITDA margin was -0.2% in FY24. These differing financial results, alongside Zomato's quick commerce push, have drawn analyst attention.
Competition and Execution Risks
Intense competition is a major threat to Zomato and Swiggy's profits. Rivals like Zepto and Amazon use deep discounts and aggressive tactics that could hurt profits for established players. Jefferies downgraded Zomato to 'Hold' in January 2025 due to these pressures, also cutting its price target and halving its valuation multiple for Blinkit. While food delivery is considered 'defensible,' ongoing reliance on large capital injections to fund operations and expansion across verticals introduces execution risks. Dominant market positions could also attract regulatory scrutiny over commissions, worker conditions, or data privacy.
Analyst Views Divided on Outlook
The Indian online food delivery market is expected to see steady growth, with forecasts predicting market sizes over $59 billion by 2030, at CAGR estimates from 14.2% to over 21%. Analysts are divided on Zomato's future. Jefferies holds a cautious 'Hold' rating due to valuation and competition worries, while Morgan Stanley is 'Overweight,' seeing Zomato as a sector leader. Investec initiated coverage in April 2026 with a 'Buy' rating and ₹375 target, citing Zomato's integrated model, Blinkit's position, and advantages over Swiggy. This highlights the ongoing debate on whether market growth justifies the competitive risks and the tough path to widespread profitability.