Incred Launches Coverage on India’s Food Tech, Boosting Zomato and Swiggy With ‘Add’ Rating

Key Takeaways

Zomato employs a dedicated delivery fleet for both food and quick commerce services, enhancing operational efficiency.
Achievements in quality control and customer satisfaction reinforce Zomato’s position in the competitive Indian food delivery market.
Projected revenue growth for Zomato’s segments is 23% and 72% from FY 2024 to FY 2027, despite risks from market volatility and competition.

Operational Efficiency and Market Position

Zomato strategically utilizes a dedicated fleet of delivery partners for its food delivery and quick commerce services, a practice that sets it apart from competitors. This focus on operational efficiency across both segments ensures timely service and effective order fulfillment through an extensive restaurant network. According to Incred, this integrated approach enables Zomato to maintain high service quality, significantly contributing to customer satisfaction and fostering a superior customer experience. Consequently, these factors solidify Zomato’s leadership within the competitive Indian food delivery landscape.

Blinkit, Zomato’s quick commerce arm, is anticipated to reach adjusted Ebitda breakeven within the next two to four quarters. This milestone is expected to unlock significant investment potential, allowing Zomato to counteract rising competition and capture additional profits in the expanding market. Incred forecasts a robust compound annual growth rate (CAGR) in revenues of 23% for the food delivery segment and 72% for the quick commerce sector from FY 2024 to FY 2027, which will be the primary drivers of Zomato’s overall business growth.

Despite the promising outlook, several risks could impact performance. Changing consumer preferences, intense market competition, operational challenges, and market volatility pose key threats to Zomato’s expansion strategy. Balancing these risks while capitalizing on growth opportunities will be crucial for Zomato as it continues to navigate the evolving online food delivery and quick commerce landscape.

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