Zomato v/s Swiggy: Who is winning?

A must read for all Zomato and future Swiggy investors!

I am an investor in Zomato and I strongly believe that the industry in which the company operates will grow exponentially in the coming years. Sadly, I don’t have high exposure in the company because of super-premium valuations.

Now, with Swiggy going to get listed, it is important to know Zomato’s position. Important question in front of me:

1. Is Swiggy a better company than Zomato?

2. Will Swiggy's listing impact Zomato’s share price?

3. Which of the two is doing better financially?

4. Who is at a better valuation?

The answer to the last question is not available yet. Can you tell me in the comments - why?

Swiggy v/s Zomato: Who is winning the battle?

Before comparing Swiggy and Zomato, let's break down the key metrics:

• GOV: Gross Order Value, the total value of orders placed on the platform.

• Gross Revenue: The total revenue generated by the platform, including fees from restaurants and delivery charges.

• Adjusted EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of a company's profitability.

• AOV: Average Order Value, the average value of each order placed on the platform.

• Contribution Margin: The percentage of revenue remaining after deducting variable costs.

• Average Monthly Transacting Users: The number of active users making purchases on the platform each month.

Key Comparisons

• GOV: Zomato has a higher GOV, indicating a larger market share and more orders placed on its platform.

• Gross Revenue: Zomato also has higher gross revenue, likely due to its larger user base and higher average order values.

• Adjusted EBITDA: Zomato has a positive adjusted EBITDA, indicating profitability, while Swiggy has a negative adjusted EBITDA, suggesting it is still investing heavily in growth.

• Contribution Margin: Zomato has a higher contribution margin, indicating that it is more efficient in converting revenue into profit.

• User Base: Zomato has a larger average monthly transacting user base, suggesting a wider reach and higher customer engagement.

Final Verdict

Overall, Zomato appears to be in a stronger position compared to Swiggy. It has a larger user base, higher revenue, and a positive adjusted EBITDA, indicating better financial performance. However, it's important to note that this analysis is based on the limited data available (including valuations).

Other factors such as customer satisfaction, brand reputation, and long-term growth strategies could also influence the overall competitiveness of these companies.

All the marketing around the pre-IPO will drive the demand up. Look at these pictures.

Given that Zomato is the clear winner on most financial parameters, the only way for Swiggy to attract retail investors is by beating Zomato on valuations. Swiggy will likely command a lower valuation compared to Zomato.

P.S. - I am also a Zomato customer (I have not used Swiggy in the last 4 years).

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