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Food delivery company Zomato‘s market share in the food delivery segment stood at 55% in 2022, a marginal increase from 53% in 2021, according to a research note by brokerage firm JM Financial dated June 27.

Zomato has consistently snatched market share from rival Swiggy in the food delivery vertical in the last five years, according to data in the research note.

The Deepinder Goyal-led firm reintroduced its Gold membership programme in January, hoping to improve its profitability prospects. It had said during the Q3 earnings call that it logged over 9 lakh sign-ups in the first few weeks.

The Gold programme is likely to help Zomato continue to marginally extend the market share lead in the first six months of 2023, the report said. However, it noted that significant changes in market share are unlikely in the near term as both rivals have prioritised profitability improvement over market share.

On Tuesday, Prosus said in a report that portfolio company Swiggy recorded higher average order value, and increased revenue from delivery fees and advertising sales in FY 2023. It clocked $2.6 billion in gross merchandise value (GMV) in the same period.

“Swiggy also focused on its profitability journey, which is reflected in its financial performance, in the past two reporting periods. Swiggy has concentrated on reactivating users, increasing monthly frequency and improving user conversion,” the Prosus report added.

However, the results indicated that Swiggy’s food delivery business grew 5% sequentially in the second half of CY22, slower than 8% growth reported by Zomato.

“The results are quite a contrast to broader market expectations, as it was widely presumed that Zomato would have lost at least some share in the absence of any active loyalty programme for most part of 2HCY22,” JM Financial said.

JM Financial assigned a ‘buy’ rating to Zomato’s shares at a target price of Rs 105, according to the note.

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Credit: JM Financial note dated June 27

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A note by HSBC in March said that Zomato began reclaiming some of its market share from rival Swiggy in the food delivery play, helped by an uptick in Gold membership signups. The comeback of the Gold programme is also expected to help Zomato improve its unit economics in the current quarter though the food delivery market may slow down further, the report added.

In the fourth quarter of FY23, Zomato posted a 70% increase in revenue to Rs 2,056 crore in the fourth quarter of FY23, helped by growth in its B2B supplies business Hyperpure. Losses for the period declined to Rs 188.2 crore, down 47% from the year-ago period.