Published 16:11 IST, October 24th 2024
Food Delivery Gets Costlier as Zomato and Swiggy Hike Platform Fee Ahead of Festivals
Zomato and Swiggy hike platform fees to Rs 10 in select cities ahead of the festive season, citing operational adjustments amid growth challenges.
In the lead-up to the festive season, major food delivery platforms Zomato and Swiggy have increased their platform fees to Rs 10 in certain cities, including Delhi. Both companies mentioned that such adjustments are routine and can vary by location. However, Swiggy has not yet commented on the changes.
Zomato Confirms Rs 10 Hike
Zomato confirmed the fee increase, describing it as a strategic adjustment. However, the company has not disclosed which other cities will be affected by this change. According to Zomato , the platform fee may vary across locations, and the move was made to enhance operational efficiencies during this peak season.
While Zomato clarified the increase, Swiggy has yet to provide a reason or specify the extent of its fee adjustment.
Zomato Shares Dip After Confirmation
Zomato ’s shares dropped by 3.51%, closing at Rs 254.60 on the Bombay Stock Exchange following the company’s statement that the platform fee increase is "not a rumor." The company confirmed that the Rs 10 fee was indeed visible on its public mobile application.
In its response to stock exchanges, Zomato reiterated, “At the outset, we would like to state that this is not a rumor, as the source of information mentioned in the article is the Zomato mobile application itself which is public and available for everyone to see and check.”
Financial Performance and Future Outlook
The announcement follows the release of Zomato 's Q2FY25 financial results, which revealed a five-fold jump in net profit to Rs 389 crore. Revenue also surged by 68% to Rs 4,799 crore, driven by improved food delivery margins and progress in the quick commerce segment.
Zomato is also set to raise up to $1 billion through a qualified institutional placement (QIP), as the company aims to enhance its competitive edge against rivals such as Zepto and Swiggy. The raised funds will support expansion and other strategic initiatives.
Growth Despite Slower Pace
Despite the challenges, Zomato ’s core food delivery service continues to grow. The Gross Order Value (GOV) for food delivery rose by 21% year-on-year, while Monthly Transacting Customers (MTCs) grew by 13%. These figures suggest stable demand, even as the rate of growth has slowed compared to earlier quarters.
CLSA Revises Forecasts
Investment firm CLSA has revised its earnings forecasts for Zomato , lowering projections for FY25-27 by 21% to 54%. However, it raised the target price to Rs 370, pointing to the company’s long-term growth potential despite increased taxation and rising costs from Blinkit’s expansion.
Updated 16:19 IST, October 24th 2024