Image Source: The Economic Times
India’s food-tech battleground is witnessing a dramatic mutual fund migration. Despite a 17% surge in Zomato (now Eternal Limited), fund houses are offloading the stock while rapidly buying into competitor Swiggy, reshaping the landscape for new-age shares.
Key Highlights
Mutual funds sold Rs 1,700 crore worth of Zomato shares last month despite a strong rally, led by ICICI Prudential and Mirae Asset, which sold Rs 810 crore and Rs 820 crore respectively.
Simultaneously, funds pumped Rs 1,400 crore into Swiggy, capitalizing on a 26% year-to-date drop, with major buyers including Mirae Asset, HDFC, SBI MF, Bandhan, and Invesco.
This move represents a classic sell-the-peak, buy-the-dip strategy as funds book Zomato profits and bet on a Swiggy turnaround.
Why the Big Shift?
Zomato’s recent massive rally—up 21% in June and another 17% in July—signaled to many fund managers that much of the short-term upside was captured. Analysts note this is profit-booking following rapid gains.
In contrast, Swiggy’s stock has suffered a deep correction—falling 26% this year and trading near its 52-week low—making it an attractive turnaround candidate for value-seeking institutional investors.
Fund managers believe Swiggy’s Q1 results showed a profitability trough, with brokerages anticipating reduced losses and improved operational discipline as dark store expansion pauses and competition stabilizes.
Analyst and Market View
While Goldman Sachs and Jefferies maintain upbeat views on Zomato due to strong demand in its food delivery and quick commerce segments, citing double-digit revenue growth and market leadership, much of the institutional buying has paused, awaiting lower entry points.
For Swiggy, Jefferies and others expect recovery, noting the business remains volatile but ripe for rebound if competition and expansion costs continue to moderate. HSBC values Swiggy’s food delivery at $8 billion.
Some funds, like Axis Mutual Fund and Motilal Oswal, still found Zomato attractive and added to their holdings, but the broader trend was a rotation into Swiggy.
What Should Investors Watch?
Zomato’s lofty valuation (premium price-to-sales) and already-realized upside could mean near-term consolidation unless new catalysts emerge.
Swiggy, trading at lower valuation multiples and near multi-year lows, could see sharper upward moves if turnaround themes play out.
Both platforms vie for dominance in quick commerce and food delivery, and future quarterly results, user growth, and cost management will shape the next phase.
Conclusion
The Rs 3,100 crore repositioning by mutual funds reflects a tactical bet on Swiggy’s rebound potential and caution on Zomato’s overheated rally. As India’s food delivery war intensifies, investors will closely follow mutual fund activity as a leading indicator of confidence in the sector’s next winner.
Source: Economic Times, Motilal Oswal, HSBC, August 18, 2025
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