Zomato shares fell 4% to Rs 214.75 on the BSE, while Swiggy dropped 4% to Rs 272.95. Quick service restaurant stocks also tumbled, with Jubilant FoodWorks down 4%, Sapphire Foods sliding 3%, Westlife Foodworld declining 3%, and Devyani International losing 1%.
The selloff comes as commercial LPG cylinder supplies have tightened in several cities, with restaurants reporting delays in deliveries owing to disruption in supply from the Strait of Hormuz.
India’s extreme dependence on Middle Eastern LPG has left the sector particularly vulnerable, as about 90% of LPG imports originate from Middle Eastern suppliers such as Qatar, Saudi Arabia, UAE and Kuwait. “Industry estimates indicate that ~80-85% of India’s LPG imports transit through the Strait of Hormuz, making the commodity particularly exposed to disruptions in the region,” Motilal Oswal said.
The crisis poses an immediate threat to food delivery platforms just as they were gaining momentum. “Food delivery (FD) GOV growth has been improving in recent quarters, but the LPG disruption could create a near-term hiccup if shortages persist through March,” Motilal Oswal warned. “Reduced menus, limited cooking hours, or temporarily shut kitchens at some restaurants may limit order availability on platforms, leading to temporary moderation in 4Q FD order volumes.”
Unlike crude oil, India maintains no strategic LPG reserves, making the market especially fragile. “Compared with other energy imports, LPG is the most-exposed fuel in India’s basket,” the brokerage firm noted. “By comparison, ~50-55% of LNG and ~40-50% of crude oil imports pass through the Strait.”
The shortage could hit restaurants within days. A small restaurant typically consumes 1-2 commercial cylinders (19kg) per day, mid-size restaurants 3-5 cylinders, and large hotel kitchens 6-10 cylinders daily. Most kitchens maintain just 2-6 days of cylinder inventory, given storage constraints. “As a result, any supply disruption can begin to impact operations within 48-72 hours,” according to Motilal Oswal.Storage restrictions compound the problem. “Storage of LPG above 100kg (about five 19kg cylinders) requires licenses and compliance with additional safety requirements, making this impractical for small restaurant outlets,” Motilal explained.
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The timing couldn’t be worse for the delivery platforms, which had been reporting accelerating growth. Platform GOV year-over-year growth for Zomato stood at 15.9%/16.2%/18.6%/21.1% over the last four quarters, while Swiggy reported 17.6%/18.8%/18.8%/20.5% growth over the same period.
Motilal Oswal currently estimates Zomato’s GOV growth at 15.3%/18.0% in FY26/27E and Swiggy at 20.2%/17.3%. “However, if the commercial LPG shortage persists through the remainder of March, it could begin to reflect a temporary decline in order volumes in 4Q,” the brokerage cautioned.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)