JP Morgan has maintained its ‘Overweight’ ratings on Swiggy and Zomato, with target prices of ₹730 and ₹340, respectively. The brokerage views the current share prices of both stocks as attractive entry points amid robust expansion in the quick-commerce (Q-commerce) segment.
Rapid Expansion of Dark Stores
Blinkit and Zepto have achieved significant milestones in Q3CY24, surpassing FY25 targets of 1,000 and 700 dark stores, respectively. Zepto leads with the highest number of dark stores, while Blinkit closely follows. The majority of new store additions in December 2024 occurred beyond the top 3, 5, and 10 cities, reflecting their strategy to tap into underpenetrated markets.
Blinkit has expanded its reach into over 90 cities, targeting additional growth in the top 10 and 20 cities. Within the top three cities, each player focuses on population density to maximize efficiencies.
Growth Opportunities for Zomato
Zomato’s Quick Commerce division is positioned to absorb growth without significantly impacting its contribution margin or EBITDA. The company is leveraging its synergies with Blinkit to scale operations efficiently.
Sector Outlook
JP Morgan notes that all key players, including Zomato, Swiggy, and Zepto, are projected to add over 200 dark stores collectively in Q1CY25. This aggressive expansion underscores the rapid growth potential in India’s Q-commerce space, which is becoming increasingly competitive yet highly lucrative.
