Swiggy shares drop 10% near listing price after Zomato's Q3 profit falls 57%

Photo: PTI

Shares of Swiggy fell by 10% on January 21, trading at Rs 431 at around 11:05 am. This decline came after its competitor, Zomato, released disappointing Q3 results, which affected investor confidence in the entire food delivery sector. Both Swiggy and Zomato dominate the market, creating a sort of duopoly in the industry. As the stock market experienced a downward trend, Swiggy's shares followed suit, now trading about 30% lower than their peak of Rs 617 per share.

On January 20, Zomato reported its Q3 results, showing a 57% drop in net profit, which fell to Rs 59 crore from the same period last year. However, the company's revenue rose by 64% year-on-year to Rs 5,404 crore in Q3, compared to Rs 3,288 crore last year. Despite the increase in revenue, Zomato's quick-commerce arm, Blinkit, saw its quarterly losses increase significantly to Rs 95 crore.

Swiggy's shares are now close to their listing price. When the company listed its shares on the stock exchange on November 13, it saw a 7.69% premium, with the shares priced at Rs 420 on the National Stock Exchange (NSE) and Rs 412 on the Bombay Stock Exchange (BSE), which was 5.6% above the initial public offering (IPO) price of Rs 390. After that, Swiggy’s shares surged as much as 32%, reaching Rs 617 per share. However, now they are falling back to levels closer to their initial listing price.

Zomato's stock has also experienced a significant decline. Following the release of its Q3 results on January 20, the stock dropped by more than 7%. By January 21, Zomato shares had fallen by about 10% so far. This overall downturn in the food delivery sector is affecting both major players, Swiggy and Zomato.

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