Eternal, Swiggy: JM Financial sees 'negligible' impact of 18% GST on delivery charges; explains how

Brokerage JM Financial said the recent decision to levy 18 per cent GST on delivery charges collected by food-tech platforms is expected to have a negligible impact on both Eternal-owned Zomato and Swiggy.

The domestic brokerage noted that in food delivery, delivery charges are waived on nearly two-thirds of order volumes. In quick commerce, Blinkit already collects 18 per cent GST on delivery fees, while Instamart waives charges on most orders.

Further, JM Financial highlighted that platforms have historically passed on GST-related costs to customers across various fee categories, suggesting a limited incremental impact this time as well.

Recent checks by the brokerage indicated that both Zomato and Swiggy have raised platform fees in their food delivery businesses. Swiggy increased its platform fee to about Rs 15 per order (including GST), marking its third hike in three weeks after successive increases from Rs 12 to Rs 13 and then to Rs 14. Zomato has also revised its platform fee from Rs 11.8 to Rs 14.75 per order (including GST).

JM Financial pointed out that the two food-tech players recently lowered the minimum order value (MOV) on subscription-based orders to Rs 99 from Rs 199 earlier. This change, it said, was likely aimed at boosting volumes in a weak macro environment but has had the effect of reducing revenue per order as well as lowering delivery fee collections. According to the brokerage, the recent platform fee hikes appear intended to offset this impact.

"Moreover, with demand broadly remaining inelastic to platform fee increases till now, both food-techs likely feel emboldened to undertake such hikes, part of which also helps support their adjusted EBITDA margin," JM Financial observed.

The brokerage projected Zomato and Swiggy to deliver about 110 crore and 80 crore food delivery orders, respectively, in FY27. It estimated that the platform fee hikes, excluding GST, could have led to an incremental uplift of about Rs 270 crore for Zomato and Rs 200 crore for Swiggy at the adjusted EBITDA level. However, with the reduction in MOV, JM expected that the actual flow-through benefit is likely to be lower.