Zomato's revamped Gold membership programme, which it launched in January, shows signs of success, with the foodtech unicorn recovering some of its lost ground from archrival Swiggy.
A report by HSBC Global Research showed that Gold, which was relaunched at an introductory price of Rs 149 for three months, has allowed Zomato to eat Swiggy s market share in the quarter Q 4 FY 23. Zomato has started to regain some of the market share it lost in H 2 CY 22, thanks to the launch of Zomato Gold. In its report, HSBC stated that the company will continue to gain market share from Swiggy, led by an aggressive go-to market strategy.
In a prior announcement, Zomato said that 9 lakh Gold members had been added within a month of the relaunch. According to HSBC, Zomato's market share could reach 57 per cent in FY 24, which is an improvement of 13 percentage points over Swiggy since FY 20. The brokerage expects Zomato to absorb the impact of Gold benefits in the next few quarters, thereby improving its EBITDA margins. Swiggy is having a higher burn rate than its listed peer, according to HSBC.
The brokerage also sees a 64 per cent increase from current levels to Rs 87 in Zomato's stock price. HSBC expects Zomato's quick commerce vertical Blinkit to add value over the next 1 -- 2 years despite the food ordering industry showing signs of slowdown, especially outside the top 8 cities.
Blinkit's current gross order GOV run-rate of $1 billion could be doubled by FY 25, according to HSBC estimates. Blinkit is under-appreciated by the Street. Hyperlocal q-commerce is likely to see strong growth over the next few years due to low penetration and stabilizing competition. It stated that there was the potential for an improvement in profitability with increasing volumes.