On February 1, 2025, Finance Minister Nirmala Sitharaman unveiled Budget 2025, which is expected to provide substantial benefits for middle-class taxpayers and, by extension, boost the stock prices of leading food delivery platforms Swiggy and Zomato. The hallmark of the budget is the announcement of no income tax on earnings up to ₹12 lakh, aiming to significantly rectify the disposable income of the average citizen.
This advantageous change has had immediate effects on the stock market, triggering optimism among consumers and investors alike. Notably, shares of Zomato surged over 7% to reach ₹237.5, marking one of its highest values of the day, whereas Swiggy saw even stronger gains, climbing nearly 10% to hit ₹458.3. This positive response highlights the investor sentiment surrounding Budget 2025 and its anticipated economic stimuli, as many sectors are projected to benefit from the boosts to consumer spending.
Vinod Nair, Head of Research at Geojit Financial Services, remarked, "This forward-looking budget is poised to...enhance per capita income over the long term, with immediate impacts likely to include increased government spending and subsequent boosts to consumption. Industries benefiting from this include FMCG, retail, textiles, consumer durables, agriculture, and electronics manufacturing." The anticipated growth across these sectors feeds directly back to platforms such as Zomato and Swiggy, which rely heavily on expanded consumer spending.
It is worth noting, though, Zomato had experienced challenges leading up to this budget announcement. The company disclosed a staggering 57% decline in net profit during the December quarter compared to the same period last year, attributed primarily to broad-based demand slowdowns. Akshant Goyal, Zomato's Chief Financial Officer, noted: "Currently we are going through...remain confident of the long term outlook of 20%+ yearly GOV growth." This cautious optimism reflects the tumultuous market conditions prior to the budget.
With Zomato's gross order value growth barely beating sequential benchmarks and flagged as only increasing 2% sequentially, there were real concerns about the viability of food delivery firms. Despite these challenges, the sharp uptick post-budget signals renewed faith from investors. Zomato reported solid growth overall, claiming revenue from operations rose 64% year-over-year to ₹5,405 crore, with adjusted EBITDA margins also showing improvement, albeit with accelerated investments impacting profits.
Swiggy, experiencing similar stock fluctuations, gained about 5.36% on the day following the budget announcements. The market capitalization of Swiggy climbed to ₹96,286 crore, showcasing the strength of investor confidence. The stock movement of firms like Swiggy and Zomato aligns closely with changes impacting consumer behavior and economic policies aimed at enhancing spending power.
During her address, Sitharaman also emphasized new schemes aimed at supporting gig workers, stating, "Online platform workers or gig workers provide great dynamism to the new-age services economy. Our government will arrange for ID cards for them...This will benefit 1 crore gig workers in the country." This support initiative aligns well with the operational model of both Zomato and Swiggy, aimed at amelioration for workers within their frameworks, and it reflects the government's recognition of the growing gig economy.
The increase of shares by over 6% for both food delivery giants post-budget underlines key investor reactions to both the broader tax relief and specific measures intended to stimulate consumer confidence across the board. Zomato and Swiggy's stocks are seen not just as standalone entities but are viewed as indicators of the economic pulse of India's consumption-driven marketplace.
Overall, the market's response to Budget 2025 can be summarized as overwhelmingly positive, with expectations set on significant boosts to consumption and spending among the middle class. The outlined strategies present feasible boosts for Swiggy and Zomato, potentially translating to quicker recovery from recent declines and indicating optimistic financial trajectories for the companies going forward.