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Investec's Analyst View
Investec has begun analyzing India's main food delivery and quick commerce companies, highlighting key differences in how they operate and their future prospects. The firm clearly prefers Zomato (Eternal) over Swiggy. This isn't just about different ratings; it shows Zomato has a much stronger position in the costly quick commerce market. Investec's analysis focuses on the specific operational advantages it believes will drive long-term value, especially in the fast-growing and competitive quick commerce sector.
Blinkit's Lead in Quick Commerce
Investec sees quick commerce as a 'survival of the fittest' market, expecting over 40% annual growth until FY30. In this tough competition, Zomato's Blinkit is seen as the leader. The brokerage estimates Blinkit is several years ahead of Swiggy's Instamart in development, thanks to its greater scale and better unit economics. Data for Q1 FY25 shows Blinkit held a 46% market share in quick commerce, handling about 1.57 million orders daily. This significantly leads Swiggy Instamart, which had 1.21 million orders and a 25% share. Importantly, Blinkit cut its losses by 92% in FY25, a sharp contrast to Instamart's losses which grew by 60%. Blinkit plans to expand its dark stores to 2,000 by December 2025, suggesting a more viable path to profit than Instamart, which still faces higher costs and less certainty of breaking even. Blinkit's average delivery time is estimated at 10-12 minutes, compared to Instamart's 12-15 minutes, reinforcing its speed advantage in busy cities.
Food Delivery Remains Strong, New Ventures Grow
Beyond quick commerce, the core food delivery market is described as 'defensible for now'. Both Zomato and Swiggy are expected to see around 17% growth and over 20% EBITDA expansion between FY26 and FY30. Growth drivers include more users, slightly higher order values, and improved margins from better operations and advertising. Zomato's established food delivery business is a strong performer, significantly boosting its overall finances. Its revenue in this segment more than doubled between Q4 FY23 and Q4 FY25 to Rs 840 crore. Newer businesses like Zomato's District platform for dining and ticketing are seen as low-cost opportunities, though their current financial impact is small. Zomato's wider strategy, including its Hyperpure B2B supplies and the Blinkit acquisition, has been key to its financial recovery, moving from consistent losses to overall profitability since Q1 FY24.
Valuation and Market Growth Outlook
Investec notes that Zomato's valuation is attractive. It trades at an estimated 2.4x revenue and 4.5x EBITDA for FY26-28, while showing better growth than other large consumer companies. As of April 28, 2026, Zomato's market cap was about ₹2,46,663 crore with a P/E ratio of 97.6, indicating strong investor belief in its growth potential. The Indian online food delivery market is a major growth area, projected to reach USD 337.15 billion by 2034, growing at 22.18% annually. The quick commerce segment, valued at an estimated USD 3.65 billion in 2026, is expected to grow by 12.74% annually to USD 6.64 billion by 2031. These market trends, driven by more people living in cities, higher smartphone use, and changing consumer habits, strongly support Zomato's combined strategy.
Challenges and Risks for Zomato
Despite Zomato's strategic strengths, significant challenges remain. The quick commerce sector, while growing, is expensive to operate in. Blinkit's rapid expansion, adding 216 new stores in Q4 FY25, led to higher operating costs. Zomato reported a 78% year-on-year drop in net profit for Q4 FY25 to Rs 39 crore due to these increased expenses. The company also closed its 'Quick' and 'Everyday' 15-minute delivery services, citing concerns about customer experience and profitability. Intense competition, especially from Zepto with its aggressive pricing and quick expansion, constantly pressures profitability and could lead to price wars. Zomato's core food delivery growth has also been described as 'below expectations for now'. Regulatory issues continue to be a factor; Zomato is contesting a GST demand of Rs 23.26 crore for FY18-19 in Karnataka and is cooperating with the Competition Commission of India (CCI) on an antitrust probe, which it believes does not harm competition. Ensuring food safety compliance with FSSAI regulations also requires ongoing attention. While Zomato has little debt and significant cash reserves after recent fundraising, managing Blinkit's profitability amid strong competition is a key hurdle.
Analyst Outlook and Ratings
Investec's 'Buy' rating for Zomato comes with a Rs 375 target price, reflecting confidence in its integrated model and Blinkit's strong market position. This contrasts with the 'Hold' rating and Rs 310 target for Swiggy, clearly showing a preference for Zomato's execution and scale advantages. Although recent results showed a lower net profit due to Blinkit's expansion, the brokerage believes Zomato can use its leadership in quick commerce to achieve sustained growth and profitability. However, regulatory and competitive pressures will require careful operational management.