Food delivery is likely to grow flat QOQ in the fourth quarter: Analysts

Copyright © HT Digital Streams Limit all rights reserved. Markets contribution is an important metric for profitability. (PTI) Summary cash burning in Quick Commerce will continue in the fourth quarter to injure both firms’ bottom lines as they still invest in the stir in dark store operations and enter more cities. Bengaluru: Growth in food delivery margins for Eternal (formerly Zomato Ltd) and SWIGGY probably remained a quarter-to-quarter basis in the fourth quarter of the FY25 as signs of slowdown in the total food delivery segment, analysts said Mint. ‘Margins would have been flat in the fourth quarter of a QOQ [quarter on quarter] Base as it has improved sharply in the previous quarter. We do not expect a similar massive improvement in the near term, ‘says Karan Taurani, analyst at Elara Capital. Swiggy is likely to see a sharper rise in margins than Zomato, according to Taurani. Contribution is an important metric for profitability. Zomato’s adjusted earnings before interest, tax, the value of the operation and amortization (ebitda) in its food delivery, which excludes the work of the operation (ebitda). (ESOP) costs, an improvement has up to 4.3% of gross order value (GOV), an important metric, in the December quarter of 3.5% in the previous quarter, powered by the increase in platform money and other strategic calls. More: Quick Trading, Long Refund: Can Zomato and SWIGGY deliver returns to shareholders? ‘Yes, we have seen the improvement of the margin through the increase in platform fees for customers and other cost -effectiveness and optimization. We believe that the margin should not only sustain, but will continue to stabilize from here to stabilize about 5% in the next few quarters, “said Rakesh Ranjan, head of Zomato’s food delivery business, told shareholders in the Q3 letter. Not an impact on the coarse order. Newer players like Swish-based Bengaluru-who recently raised $ 14 million in the series A funding led by Hara Global and Accel-and the Gurugram-based Zing. These new businesses seek to learn from established food delivery startups such as SWIGGY and Zomato, which started within a decade to well-capitalized, listed businesses to form an integral part of the urban and semi-urban domestic ecosystem. “Macro conditions affecting the segment are likely to remain more or less the same. However, we can expect a stable double-digit growth in the region of 20-25% in the topline for both firms,” ​​Forrester Research vice president Ashutosh Sharma told Mint. Analysts also remain modest about their expectations of 10 minutes of food delivery proposals, paying attention to its impact on the overall enterprise will be minuscule. The firms also investigate possibilities outside of food delivery, with the recent introduction of pain by SWIGGY (professional white collar discovery) and the expansion of the district by Zomato. Analysts said the fourth quarter is likely to emphasize their expansion plans. Quick trading performance -cash burning in Quick Commerce will still damage the most important lines for both firms in the fourth quarter, as they still invest a lot in the stir in dark store operations and more cities, Forrester Sharma said. “Quick trade will continue to drain their profits in the foreseeable future, although some of their actions to achieve profitability will begin to bear fruit in the medium term. I expect them to continue to burn cash and invest in operations,” Sharma added. Swiggy has already seen a negative impact on its margins of Instamart, weighed by increasing competition in the delivery of groceries and the cost of heavy hoods. The contribution margin for the rapid trading enterprise dropped to a negative 4.6% from a negative 1.9% over the past quarter. Read more: Consumer brands are planning to write the Influencer Marketing Playbook to push rural sales? In a letter to shareholders, Swiggy said the margin of Instamart was influenced by a mixture of reasons, including the expansion of dark store and replacements that are still encountered in terms of scale, increased competition leading to higher customer tracking, increased investment over -achieving and activation of the season, and seasonal investment networks during party periods. Zomato’s blinker lost £ 103 in the fourth quarter, a sharp turnaround of his break -even point in the previous quarter. ‘The losses in our Quick Commerce business this term are largely due to the growth of growth in the business that we would otherwise have done in an astonishing way over the next few quarters. It seems that we will come to our target of 2,000 stores by 2025, much earlier than our previous leadership of the shareholder of the partholder. “Q4 gives us an idea of ​​the pace of store supplements and possibly the prospects about profitability in fast trading,” said Elara Capital Taurani. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #zomato #swiggy Mint Specials