Brokerages see limited margin impact on Zomato, Swiggy from new labour-code costs

Shares of India’s two leading food delivery aggregators—Eternal and Swiggy—were trading with mild gains in Monday’s intraday session on November 24, as analysts estimate that the new labour codes will have only a marginal financial impact on both companies in the short term.

They also believe that, over time, platforms may pass on incremental costs to customers, merchants, or workers, limiting long-term margin pressure.

On Friday, the Union government announced that four labour codes would come into immediate effect. These reforms aim to rationalise India’s 29 existing labour laws and, for the first time, formally define ‘gig workers’, ‘platform workers’, and ‘aggregators’.

The new rules increase the compliance burden on aggregators such as Swiggy, Zomato, and other e-commerce and quick-commerce platforms, which will now be required to contribute 1–2% of their annual turnover—capped at 5% of the amount paid or payable to gig and platform workers—towards social security benefits.

Brokerages view near-term cost pressure as limited

JM Financial estimates that if the government sets the contribution at 2% of annual turnover, the effective cost for Eternal and Swiggy would be about ₹2.1– ₹2.5 per order across food delivery and quick commerce. On an FY26 basis, this translates to a total contribution of roughly ₹4.3 billion for Eternal and ₹2.6 billion for Swiggy.

The brokerage expects both companies to gradually pass on most of this additional cost to customers, adding that a ₹2– ₹3 increase per order is unlikely to materially affect user behaviour given recent absorption of similar platform fees.

Morgan Stanley estimates an added burden of roughly ₹1.5– ₹2.5 per order, noting that the eventual EBITDA impact across platforms may be 4–10%, though most companies are likely to pass on a meaningful portion of this cost to customers, merchants, or delivery partners over time.

Bernstein expects a milder hit of 25–70 basis points to EBITDA, with quick commerce more exposed than food delivery, but highlights that both Swiggy and Eternal already have profitable or near-profitable order-level economics, and existing insurance coverage could offset part of the requirement.

Elara Securities also pegs the incremental cost at ₹1– ₹2 per order under the 1–2% turnover mandate and says short-term demand may soften if platforms increase fees, but both companies already offer worker insurance and are engaging with regulators, reducing the likelihood of any significant long-term margin damage.

Gig workforce has more than doubled in the past decade

India’s gig economy has ballooned over the past decade, thanks to the proliferation of online commerce and marketplaces such as Zomato, Swiggy, Uber, Amazon and Flipkart.

These temporary workers are typically hired via third-party staffing firms. The country’s gig workforce is projected to grow from 10 million in 2024-25 to 23.5 million by 2029-30, according to a Press Information Bureau note on 30 August.

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