Swiggy, Zomato stocks tumble up to 7%: Should you sell?
What's the story
India's top food delivery platforms, Swiggy and Zomato, have seen a major plunge in their share prices today. The fall is more than 6% for both the companies, reflecting the wider stock market sentiment wherein investors have lost nearly ₹10 lakh crore in today's session. Swiggy's shares opened at ₹444.50 on the BSE, nearly 1% lower than the previous closing price of ₹448.50. However, the price soon dropped to ₹415.30, a fall of over 7%.
Market impact
Swiggy's stock performance amid market volatility
Over the last five days, Swiggy's share price has corrected over 8% amid market volatility. This trend mirrors the broader instability in the stock market and its effect on individual companies. HSBC Global Research has sounded caution over Swiggy's future prospects, noting intense competition as a potential challenge for both growth and profitability. They started Swiggy coverage in December with a "Hold" rating and ₹550 target price.
Stock decline
Zomato's shares also take a hit
Zomato's shares have also taken a hit amid the market downturn. The company's share price opened at ₹213.40 on the BSE, about 1% lower than the previous closing price of ₹215.80. The price then fell to an intraday low of ₹207.90, marking a decline of nearly 4%. Over the last five days, Zomato's share price has also fallen by up to 7% amid market volatility.
Market analysis
Analysts' outlook on Zomato amid competition
While analysts at Macquarie acknowledged Zomato's efficiency as a quick commerce and food delivery platform, they expressed concerns over the limited margin of safety for its shares amid rising competition. Motilal Oswal Financial Services took a more optimistic stance, suggesting that despite short-term challenges, there could be long-term gains for Zomato. Jefferies India Pvt Ltd maintained "Hold" ratings on Zomato with a slightly lower price target of ₹255 after reviewing the company's Q3 results.