Swiggy Instamart Behind Blinkit, Zepto In Quick Commerce Race: Citi

Amid raging competition in India’s quick commerce space, brokerage firm Citi has said that Zomato-owned Blinkit and Zepto have captured a larger market share in the rapid delivery space, leaving behind Swiggy Instamart.

Zomato’s market share is estimated at 41%, while Zepto is projected ‘par/higher than Swiggy’, based on data traffic trends and industry reports, pushing Sriharsha Majety led company to the third place.

“In Quick Commerce, Swiggy may be in the third spot in terms of market share behind Blinkit and Zepto,” Citi said in the note, adding that its market share in the quick commerce space is estimated at 23%.

The note also highlighted a gap in unit economics, mentioning that the cash burn rate for Swiggy is materially worse compared to Zomato. 

“Additionally, the gap in unit economics and cash burn rate for Swiggy are materially worse relative to Zomato which means there is a lot of ongoing convergence on customer acquisition pace, AOV (average order value) increase, supply chain cost reductions that Swiggy needs to deliver,” it said. 

For Swiggy, the rise in competition could adversely impact its business margins, user frequency, business and operations.

However, it is pertinent to note that Citi initiated coverage on Swiggy with a ‘Buy’ rating and set the target price at INR 480 as it sees growth potential in the longer run in both food delivery and quick commerce. The PT set by Citi is over 40% higher than the stock’s last (February 12) closing price of INR 341.45. 

It further mentioned that the company’s execution across food delivery and quick commerce has improved in FY25, with innovation and “fast-follow” engines kicking – both critical given fierce competition.

“We estimate QC GOV (gross order value) CAGR (compound annual growth rate) at 73% to $26 Bn and FD (food delivery) GOV CAGR at ~18% to $13 Bn in FY24-28,” the note said.

The brokerage expects Swiggy to bring focus on growth investments in the quick commerce space in FY26, given the need to close the gap on selection/footprint.

This comes after Swiggy’s Instamart in the third quarter of the current financial year (Q3 FY25) became the largest contributor to the company’s net loss. In Q3 FY25, the company’s quick commerce arm raked in a loss of INR 527.68 Cr, up 70% YoY from INR 310.36 Cr. 

Swiggy Instamart’s contribution margin dropped to -4.6% during the quarter under review from -1.9% in the preceding quarter (Q2FY25). 

The company attributed this decline to higher growth investments, particularly in user activation, and the expansion of darkstores across multiple regions. It added that increasing competition led to higher customer incentives and increased cost of customer acquisition, leading to the dip in contribution margin. 

Notably, Swiggy’s consolidated net loss rose 39.1% to INR 799 Cr in Q3 FY25 from INR 574.4 Cr in the year-ago quarter.