Zomato parent crashes 5% after market share loss to Swiggy
What's the story
Zomato parent Eternal's shares plunged nearly 5% on Tuesday, closing at ₹284.50. The fall was triggered by a UBS report that revealed rival food delivery platform Swiggy gained market share from Eternal in November. The stock was one of the biggest losers on the Nifty 50 index, falling from its previous close of ₹298.45. The stock is still about 23% lower than its 52-week high of ₹368.45 in October this year.
Market analysis
UBS report highlights market trends
The UBS report highlighted that the overall industry order volumes fell by 5.3% month-on-month in November. While Eternal's order volumes also declined by 4.4%, Swiggy saw a slight increase of 0.1%. UBS attributed Swiggy's performance to a drop in average order value and initiatives like Snacc, Bolt, and the 99 Store. Notably, Eternal had outperformed Swiggy in the previous two months.
Regulatory impact
Investor concerns over new labor codes
The decline in Eternal's shares also comes amid investor concerns over the new labor codes. Analysts predict platform companies could see an additional 5% impact on annual payments to workers, which would be about ₹3.2 per order for food delivery and ₹2.4 per order for quick commerce. However, brokerages expect these costs will eventually be passed on to consumers through higher platform fees.