India's quick commerce landscape is about to get more competitive with Swiggy, a leading food delivery company, raising ₹10,000 crore through a Qualified Institutional Placement (QIP). This fundraise is expected to help Swiggy challenge the dominance of Zomato-owned Blinkit in the market.
According to Jignanshu Gor, Director & Senior Research Analyst at Bernstein, Swiggy's fundraise is a 'war chest' that will enable the company to go 'toe-to-toe with Blinkit'. With a combined cash pile of approximately ₹35,000 crore, the two rivals are set to engage in an intense battle for market share.
Gor notes that Swiggy's primary objective is to regain lost market share by adding more stores and offering aggressive pricing and discounts. This could mean a bonanza for customers as companies prioritize growth over profitability.
With six or seven large players in the market, consolidation is inevitable. However, Gor believes that the narrative is shifting from pure growth towards demonstrating profitability. Investors are now looking for companies to show that they can be profitable, rather than just focusing on growth.
Gor identifies Blinkit as the clear leader in the quick commerce space, with a strong track record of size, unit volumes, profitability, and growth rate. Zomato, Blinkit's parent company, is seen as a natural winner and a recommended long-term investment.
The upcoming Initial Public Offering (IPO) from Zepto is expected to influence the competitive dynamics in the market. While Zomato remains the top pick, Gor cautions that the landscape will evolve significantly over the next 12 months, presenting potential opportunities for investors to buy into the stock at a better price.
Download the TradeKaizen app to practice F&O trading with real-time market data anytime, anywhere.
Get it on Google PlayConnect with fellow traders, share strategies, and improve your trading skills in our Telegram group.
Join Telegram