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Exploring the correlation between the IPL and the food delivery companies

equity market
Published Date: 03 Apr 2024Updated Date: 18 Sep 20246 mins readBy MOFSL

Introduction:

The biggest cricketing extravaganza is finally here. The most popular T-20 league in the world began with a keenly contested match between arch-rivals Chennai Super Kings (CSK) and Royal Challengers Bangalore (RCB) on Friday, 22 March 2024. As the bandwagon moves on, the teams and fans alike are geared up for some riveting cricket for the next two months.

Apart from the quality of cricket that’s being played on the field, another thing that has captured the attention during the IPL is the stock markets. After sublime rallies on Wednesday and Thursday, the indices – including the Nifty 50 and the BSE Sensex – look all set to breach their all-time high figures during the IPL.

As an investor, you can look to cash in on the opportunity by investing in stocks that tend to do well during the cricketing extravaganza every season. Among them are the food delivery stocks such as Zomato and Swiggy. While Zomato is already a listed company, you can anticipate the Initial Public Offering (IPO) of Swiggy to hit the markets anytime soon.

This blog post captures how the ongoing IPL can impact the performance of food delivery companies and whether it’s the right time to invest in their stocks. Keep reading.

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The emergence of food delivery companies in India

With the advent of technology and changing consumer preferences, food delivery services have witnessed exponential growth in India. Platforms like Swiggy, Zomato, and Uber Eats have revolutionised the way people dine, offering convenience, variety, and doorstep delivery. This trend has been further accelerated by the COVID-19 pandemic, as more consumers turned to online ordering to satisfy their cravings while staying safe at home.

The IPL fever

On the other hand, the IPL has evolved into one of the most anticipated sporting events in India, attracting a massive viewership both on television and digital platforms. The tournament not only ignites the passion of cricket enthusiasts but also creates a festive atmosphere across the country. People gather to watch matches together either at stadiums or in the comfort of their homes.

As per a Redseer report, online food delivery firms such as Swiggy and Zomato registered 7% growth in their business during the IPL 2023. The growth was primarily attributed to their prudent strategy in marketing campaigns and advertisements, leading to restrained spending. 

The report stated that food delivery companies opted for subtle and understated strategies rather than relying on extravagant and attention-grabbing advertisements, resulting in a 7% increase in their business.

Even during the IPL seasons from 2017 to 2020, online food delivery firms witnessed significant spikes in their revenues. Anticipating that this trend will continue in 2024 as well, investing in the stocks of these companies during the IPL isn’t a bad idea at all.

 

How IPL is boosting food delivery companies?

Below are the factors that contribute to the growth of food delivery firms during the IPL:

  • Increased demand during matches

During IPL matches, there is a surge in demand for food delivery services as fans prefer to enjoy the game with delicious snacks and meals. Whether it's ordering pizzas, burgers, or traditional Indian snacks like samosas and pakoras, food delivery platforms witness a significant spike in orders during match hours.

  • Promotional offers and tie-ups

To leverage the IPL frenzy, food delivery firms often collaborate with teams, players, and sponsors to roll out exclusive promotional offers and discounts. These tie-ups not only attract cricket enthusiasts but also enhance brand visibility and recall. For instance, discounts linked to match outcomes or player performances create excitement among customers, driving them to place more orders.

  • Innovative marketing campaigns

During the IPL season, food delivery platforms unleash a barrage of marketing campaigns and advertisements tailored around cricket themes. Whether it's witty social media posts, engaging contests, or catchy TV commercials, these firms leave no stone unturned to connect with their target audience and drive engagement.

To conclude

In conclusion, the IPL serves as a boon for food delivery firms in India, providing them with a golden opportunity to capitalize on the cricket frenzy and boost their business. As an investor, you can leverage this opportunity by investing in the stocks of food delivery companies with a short-term horizon.

 

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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