Zomato, Swiggy shares in focus as GST council considers cutting food delivery GST to 5%

Shares of food-delivery companies Zomato and Swiggy are likely to remain in focus on Tuesday as the GST council may reduce the tax on food delivery charges by e-commerce platforms to 5%, effective January 1, 2024.

The GST Council, which is chaired by the federal finance minister, may lower the tax on food delivery charges by e-commerce operators to 5%, which was earlier 18%, said CNBC-TV18 reports, citing sources.

The potential tax cut, which could take effect from January 1, 2025, would not allow food delivery platforms such as Zomato and Swiggy to claim tax credits.

The shares of Zomato had closed 2% higher at Rs 294.25 on the BSE on Monday, while Swiggy shares settled 11.7% higher at Rs 594.80.

In a recent update, domestic brokerage firm Axis Capital had initiated coverage on Siggy with a target price of Rs 640 stating that the company provides a compelling investment opportunity as India's second-largest Q-com/food-delivery player as the food-delivery and Q-com businesses remain underpenetrated, with a long growth runway.

The shares of Swiggy got listed on the exchanges earlier in the month of November at a price of Rs 420 on the NSE and Rs 412 on the BSE. Since then, the stock has increased by 41.6% and nearly 44.3% on the NSE and the BSE respectively.

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Meanwhile, the shares of Zomato have increased by 138% in the last one year and by 136.35% in the current calendar year so far. Additionally, in the last 6 months and 3 months, the stock has risen by 58% and 6% respectively.

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