Zomato, Swiggy Shares Steady After Early Dip as New Labour Codes Take Effect

Zomato and Swiggy started the week with volatility as India’s new labour codes came into force, raising alarm over higher operating costs for platforms dependent on gig workers. Both stocks slipped up to 2 percent in early trade on Monday, reflecting investor concern about the statutory contributions now required under the new rules.

However, the weakness did not last long. As brokerages assessed the financial implications, market sentiment improved. By 10:15 am, Zomato’s listed entity Eternal was down only 0.3 percent at Rs 301, while Swiggy recovered into positive territory, rising 1.2 percent to Rs 390. Analysts now expect the overall impact of the new labour framework to be meaningful but manageable.

New Labour Codes May Push Delivery Costs Up Slightly

The government’s updated labour framework requires mandatory social-security contributions for gig and platform workers—an expense that food-delivery and quick-commerce players will now need to absorb.

Brokerages have begun quantifying this cost burden, indicating that customers may see a slight rise in delivery fees as platforms adjust to the new statutory payouts. The broader food-delivery ecosystem is expected to feel some pressure, though analysts emphasise that the industry should be able to absorb the changes over time.

Morgan Stanley noted that the reforms could increase gig-worker costs and temporarily weigh on sentiment around the sector. Aggregators will now contribute 1–2 percent of revenue to a gig-worker welfare fund, translating to Rs 1.5–2.5 per order for food delivery and quick commerce. This could mean a 4–10 percent impact on adjusted EBITDA across key online categories.

“A slight increase in delivery charges cannot be ruled out,” analysts said, highlighting that platforms may gradually pass on part of the burden to customers as part of the transition.

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Impact Expected to Be Limited and Shared Across Stakeholders

Despite the added statutory cost, brokerages believe the change will not significantly harm margins in the long run. Morgan Stanley added that the expense would likely be shared across platforms, workers and consumers, reducing pressure on any single part of the chain.

Importantly, both Zomato and Swiggy have publicly stated that they do not expect any material long-term hit to their business models from the new rules.

CLSA’s estimates suggest that the net impact could be roughly Rs 1 per order for both Swiggy and Zomato’s parent, Eternal Ltd. The brokerage expects platforms to pass this small cost on to users gradually. It also noted that both companies already extend several social-security benefits, which should help cushion the transition to the new framework.

Bernstein’s projections point to a manageable impact as well. According to the firm, the new labour code could reduce food-delivery adjusted EBITDA margins by 25–65 basis points, while quick-commerce units may see a 60–70 bps impact. Though measurable, these changes are not expected to alter the long-term unit economics of the sector.

Government’s Focus: Formalisation and Worker Protection

The revised labour codes are part of the government’s broader push to bring more structure and protection to India’s evolving workforce. The new framework aims to formalise employment, expand social security and strengthen protections for gig, migrant, unorganised and platform-economy workers.

Given the rapid scale of food delivery and quick commerce, the move marks a significant step toward recognising gig workers as part of the mainstream labour force.

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