The food delivery business in India is going through a re-biasing process.
Zomato and Swiggy had taken the markets by storm during the Pandemic era, and had seen strong tailwinds which made their toplines grow massively.
But now with the changes in the post pandemic era, we can see a significant demand for a dine-in experience. As more and more people get comfortable with crowds, and seek entertainment which are not restricted to dining in front of their TVs and in the closed environment of a select few, the demand for D2C dining will see a drop.
Additionally, cloud kitchens will be looking for local delivery partners, where the margin of profits can be higher. There is room to grow in the food delivery business if you can keep your overheads low, and increase the share of revenues for the producers. Unfortunately, Zomato and Swiggy will need to relook at their cost structure and this means a reduced Gross Margin.
Nomura for example sees a further 20% downside on the Zomato businesses.
Technically speaking, The price action is following a classic downward penant flag. We may see Zomato reach the 45 INR mark within the next 2-3 months.
Zomato and Swiggy had taken the markets by storm during the Pandemic era, and had seen strong tailwinds which made their toplines grow massively.
But now with the changes in the post pandemic era, we can see a significant demand for a dine-in experience. As more and more people get comfortable with crowds, and seek entertainment which are not restricted to dining in front of their TVs and in the closed environment of a select few, the demand for D2C dining will see a drop.
Additionally, cloud kitchens will be looking for local delivery partners, where the margin of profits can be higher. There is room to grow in the food delivery business if you can keep your overheads low, and increase the share of revenues for the producers. Unfortunately, Zomato and Swiggy will need to relook at their cost structure and this means a reduced Gross Margin.
Nomura for example sees a further 20% downside on the Zomato businesses.
Technically speaking, The price action is following a classic downward penant flag. We may see Zomato reach the 45 INR mark within the next 2-3 months.