Zomato shares recover early losses, Swiggy jumps 5% as labour code hit to food delivery costs seen limited

Zomato and Swiggy shares pared early gains after falling as much as 2 percent on Monday after India’s new labour codes came into effect, raising concerns over higher operating costs for platform companies. Both stocks recovered as brokerages indicated that the long-term financial impact is likely to be limited.

At the close of trading, Zomato (Eternal) stock was down just 0.4 percent at Rs 300.7. Swiggy, on the other hand, swung into green, and with a late afternoon surge, ended up 5.1 percent at Rs 405.

Cost of food delivery set to rise…

Brokerages have quantified the estimated cost implications for food-delivery and quick-commerce firms following mandatory social-security contributions for gig and platform workers under the new codes. Analysts also said that a slight increase in delivery fees cannot be ruled out for customers as platforms adapt to the additional statutory outgo.

Morgan Stanley said the reforms could increase gig-worker costs and weigh on near-term sentiment, adding that aggregators must contribute 1-2 percent of revenue to the gig-worker welfare fund. This translates to Rs 1.5-2.5 per order across food delivery and quick commerce, with a 4-10 percent impact on adjusted EBITDA for major online segments.

… But impact to be limited, shared across the chain

However, the brokerage added that the burden is likely to be shared across platforms, workers and consumers, easing the pressure on company margins. Separately, both Zomato and Swiggy also said that they see no material long-term impact on their businesses.

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CLSA estimated a net impact of roughly Rs 1 per order for both Swiggy and Zomato’s listed parent Eternal Ltd. It expects companies to pass this on gradually to consumers. Further, CLSA said that both firms already provide several social-security benefits, which should soften the incremental cost load.

Bernstein projected that the new labour code could reduce adjusted EBITDA margins for food-delivery operations by 25-65 basis points, and quick-commerce margins by 60-70 bps, indicating a measurable but manageable shift in unit economics.

The government has positioned the new labour framework as an effort to formalise employment, expand social security and strengthen worker protections, especially for gig, migrant, unorganised and platform-economy workers.

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