Swiggy IPO: Good for the sector to have multiple players, says Zomato’s Deepinder Goyal

Sriharsha Majety, Swiggy Group CEO (L) and Deepinder Goyal Group CEO of Zomato (R)

The addition of another publicly listed food tech company like Swiggy would benefit the industry, Zomato founder and group CEO Deepinder Goyal said in an interview to Moneycontrol.

His comments come nearly a week after Swiggy received an approval from the Securities and Exchange Board of India (Sebi) to float its $1.25-billion IPO, one of the largest for a new-age company in recent years. The IPO is expected in the next few weeks.

Zomato and Swiggy both compete in the food delivery market and are also arch-rivals in India’s red-hot quick commerce industry which has grown to $5.5 billion in under four years. While they were evenly poised till a few years ago, Zomato has widened the gap in recent years and now has a clear lead over Swiggy in both businesses.

“It’s good for the sectors to have multiple companies. But I do not know anything else, we really focus on our own job. We don't care about anything else. What's going on out there, nothing,” Goyal told Moneycontrol when asked how he feels about Swiggy’s IPO during the exclusive interview.

Similarly, Sriharsha Majety, co-founder and Group CEO of Swiggy, had earlier told Moneycontrol that having a publicly listed rival has its pros and cons. “We don’t have to explain what on-demand is, what the gig worker economy means and what hyperlocal is – all of these are the positives. The negative is that quarter-on-quarter you are going to be compared on the trajectory,” he said at the Moneycontrol Startup Conclave in Bengaluru on August 9. “We definitely want to make sure that it is a good trajectory and there are many quarters that are good and some that are off – it (having a listed competitor) is a net positive for sure.”

In response to a question on what he makes of food delivery on the Open Network for Digital Commerce or ONDC and if he has tried ordering food on it, Goyal quipped, “No, I have not ordered food outside of Zomato. Never ever. Never ordered on Swiggy, nor opened anybody else’s app.”

His comments come at a time when the competitive intensity between the two giants has only been increasing.

On October 5, Moneycontrol first reported that Swiggy had decided to sponsor Indian reality show Shark Tank by paying Rs 25 crore and, as part of the deal, removed Zomato’s Goyal as a shark (investor) at a time when the Bengaluru-based company looks to increase its presence and create more brand awareness which will be crucial for its IPO.

Sponsoring a show like Shark Tank helps in brand building and lowers marketing costs, both of which are important for an IPO-bound company.

Public markets vs private markets

On his transition from an entrepreneur navigating private market investors to running a publicly listed company, Goyal said the questions and expectations are the same but added that public markets are slightly easier.

“You have to give weekly data to VCs and they ask questions on a weekly basis and they can come to your office and sit down with you at any point in time. So you can't really think longer term, you have to make every week work. But when you're a public company, you do quarterly reviews and do the right things, which is way more long-term,” he said.

“Private investors just like digging because they want to look for something, according to them, which is wrong with the organisation or the startup. While there's nothing, it's all seasonality and all those things.”

Path to profitability

Zomato has been narrowing losses year-on-year since it listed three years ago and is currently profitable. The stock too has been on a tear, with its market cap nearing $30 billion in recent weeks on positive results from its quick commerce business Blinkit and its B2B business Hyperpure.

In the full year, Swiggy's revenue grew 36 percent from Rs 8,265 crore in FY23 to Rs 11,247 crore in FY24. During the same period, its losses were down 44 percent from Rs 4,179 crore to Rs 2,350 crore, helped by a stronger control on expenses.

Zomato, in comparison, had a revenue of Rs 12,114 crore and generated a profit of Rs 351 crore in FY24.

How the two food delivery giants stack up

While Swiggy had lagged Zomato, it narrowed the gap in FY24. Further, in Q1FY25, however, Swiggy prioritised growth because of which the losses widened. Swiggy saw its losses grow 8 percent to Rs 611 crore in Q1FY25 from Rs 564 crore a year ago on mounting expenses, the company’s updated draft red herring prospectus (DRHP) showed.

The company spent Rs 3,908 crore in the three months, up 27 percent from Rs 3,073 crore spent during the same period in the previous fiscal. Its revenue from operations stood at Rs 3,222.2 crore in the April-June period of the current fiscal year, an increase of 35 percent from Rs 2,389.8 crore recorded in the corresponding period of the previous year.

In comparison, its listed rival Zomato had a revenue of Rs 4,206 crore (74 percent growth year-on-year) and generated a profit of Rs 253 crore in Q1FY25.