Zomato and Swiggy Shares Surge After ICICI Securities Highlights Attractive Valuations

Brokerage Sees Strong Upside in Quick Commerce Stocks Amid Easing Discounts and Focus on Higher Order Values

Shares of Zomato and Swiggy soared on March 4 after a bullish note from ICICI Securities highlighted compelling valuations and reiterated a ‘Buy’ call on both stocks. Zomato’s shares climbed 2.6%, while Swiggy saw a stronger rally of 6.5%, as the brokerage firm projected significant upside potential in their share prices over the next year.

The ICICI Securities report stated that concerns over high cash burn in the quick commerce segment had contributed to the recent correction in stock prices. However, based on internal channel checks, the firm sees positive shifts in the operational strategies of these companies, making them attractive investment opportunities.

Easing Discounts and Shift to Higher Order Values

ICICI Securities noted that both Zomato and Swiggy are transitioning towards incentivizing higher order values, rather than relying heavily on individual item discounts. While discounting strategies are still in play, the report suggested that the peak of aggressive price cuts may have already passed, signaling a more sustainable growth path.

The brokerage added that performance marketing spends have also moderated, reflecting a shift in focus from rapid customer acquisition to improving profitability and operational efficiency.

Bullish Valuations: Over 100% Upside for Swiggy, 40% for Zomato

ICICI Securities believes that from a one-year perspective, the valuations of Zomato and Swiggy remain attractive, leading it to reaffirm a ‘Buy’ rating on both stocks.

• Swiggy’s target price has been set at ₹740 per share, implying a 127% upside from current levels.
• Zomato’s target price is pegged at ₹310 per share, indicating a 40% upside potential.

This bullish stance is based on expectations that the companies’ recent strategic shifts will improve their profitability and cash flows, despite short-term headwinds.

Impact of Union Budget and Personal Income Tax Relief

Veteran investor Raamdeo Agrawal has also expressed optimism about new-age consumption stocks, including quick commerce companies like Zomato and Swiggy.

Speaking on CNBC-TV18 on February 1, he highlighted that the personal income tax relief announced in the Union Budget 2025 is likely to increase disposable income in the hands of consumers. This, in turn, could boost spending on food delivery and quick commerce platforms, benefiting players like Zomato and Swiggy.

Stock Performance and Market Trends

Despite the bullish outlook, both stocks have faced significant corrections in 2025, in line with broader market sell-offs and earnings concerns.

• Zomato’s shares have declined 18% year-to-date (YTD) as investors reacted to overall market volatility and slower-than-expected growth in profitability.
• Swiggy has seen a steeper decline of 35% YTD, as concerns over cash burn and competitive pressures weighed on investor sentiment.

Operational Improvements and Path to Profitability

Zomato has expressed confidence that profitability could improve as store maturity increases, leading to better operational efficiencies. The company has been optimizing its delivery network and streamlining costs, which could help narrow losses and drive positive cash flows in the future.

Similarly, Swiggy has been making efforts to enhance unit economics, reducing reliance on deep discounts while maintaining customer engagement through targeted offers and premium memberships.

Outlook: Time to Buy?

With valuations normalizing and discounting pressures easing, ICICI Securities sees a strong opportunity for long-term investors to accumulate these stocks. While market volatility may persist in the near term, the brokerage expects fundamentals to improve, making Zomato and Swiggy attractive bets for patient investors looking beyond short-term market fluctuations.

As the quick commerce sector matures and shifts towards sustainable growth models, these companies are well-positioned to capitalize on India’s expanding digital economy and growing consumer appetite for convenience-driven services.