Zomato - ONDC Poses No Immediate Threat At Current Scale: Motilal Oswal
Near-term risk to further expansion in Take rate.
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Motilal Oswal Report
Over the last few days, media reports have been drawing attention to the increasing number of orders placed through Open Network for Digital Commerce and how this could potentially benefit restaurants due to the difference in take rates compared to Zomato Ltd./Swiggy duopoly.
We do not perceive direct ordering as a major concern for the industry. However, we see ONDC as potential threat to Zomato, only if it meaningfully scales up across categories, allowing it to achieve greater efficiency compared to the walled gardens.
At its current scale, we do not have enough evidence to alter our base case for Zomato.
Likely impact on take rate rationalisation remains a key risk
Though we do not envisage a large scale impact on Zomato until ONDC significantly scales up, it may impede the expansion of take rates in the near term.
If Zomato’s take rate rationalisation exercise is slowed down, it could potentially delay the company’s timeline for achieving profitability, which remains a key risk at this stage.
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