Swiggy, Zomato, Delhivery Shares Slide After New Labour Laws Kick In; Markets Fear Higher Costs

Shares of major e-commerce companies including Eternal (formerly Zomato), Swiggy, Delhivery, Nykaa, and Urban Company, slipped on Monday after the central government implemented new labour laws last week. Market analysts are expecting that the four labour codes could increase the operating costs for these labour-intensive businesses.

The stock price of Eternal slid over 2% to ₹295.80 on Monday from its previous close of ₹302.05, while rival Swiggy fell nearly 2% to ₹378.05 in early trade. Delhivery dropped about 1.8% to ₹410.40, and Nykaa slipped 1.7% to ₹263.95.

Newly listed Urban Company opened weaker as well, losing more than 1.6% to ₹140.55. The stock is now down almost 33% from its post-listing peak of ₹201.

The four codes, the Code on Wages (2019), the Industrial Relations Code (2020), the Code on Social Security (2020) and the Occupational Safety, Health and Working Conditions Code (2020), replace and rationalise 29 older labour laws and extend social-security coverage to previously unprotected categories, including gig and platform workers.

The government has not yet notified the exact details on the implementation framework for the CoSS. The platforms offering online services will need to contribute between 1-2% of their annual turnover to a dedicated fund to enable the coverage, which will be capped at 5% of the amount payable to their own gig workers.

Analysts Flag Higher Outgo

JM Financial estimates that, in the worst-case scenario, hyperlocal delivery companies under its coverage, including Eternal and Swiggy, could incur an additional ₹2.1–2.5 per order across food delivery and quick commerce. The brokerage maintains a ‘buy’ rating on Eternal with a target price of ₹450 and an ‘add’ rating on Swiggy with a target of ₹460.

"At a consolidated level, Eternal and Swiggy would have to contribute ₹4.3 billion and ₹2.6 billion, respectively, towards the fund, basis FY26 estimates. We strongly believe both companies would eventually pass on the additional burden to their end customers," the brokerage said.

"From a customer standpoint, we do not expect any material impact on ordering behaviour if the pass-through impact is ₹2.1-2.5 per order, basis recent absorption of other fees (such as platform fees)," it added.

Morgan Stanley noted that the new labour codes could lift costs for gig workers and dampen near-term sentiment. It also stated that platform companies may see an added cost of ₹1.5–2.5 per order in food delivery and quick commerce, with an estimated EBITDA impact of 4–10% across major platform-led sectors.

It added that the financial burden is likely to be shared among different stakeholders, which should soften the pressure on platforms. Overall, the new framework aims to formalise employment structures and broaden social-security coverage for all categories of workers.

Zomato, Amazon Echo Support

Amazon and Eternal welcomed the move, saying the four labour codes will help strengthen the social security access for gig workers. Zomato and Blinkit parent even stated that it does not think the financial impact on account of these rules will be detrimental to the long-term health and sustainability of its business.

It clarified that the exact financial and operational contours of CoSS will become clear only once the corresponding Rules are notified.

“We have been engaging with the government over the years and providing inputs throughout this process, and we will continue to do so. We don’t think any financial impact on account of these rules will be detrimental to long term health and sustainability of our business. We have been anticipating and planning for these social security related contributions in our businesses for a while now,” the company said.

“The consolidation of labour laws provides clearer, more uniform, and consistent rules, which supports both the country and our ecosystem. One of these four labour codes is Code on Social Security, 2020 (CoSS) which helps strengthen the social security access for gig workers across the country, including those who power our Zomato and Blinkit businesses,” it added.

Ecommerce giant Amazon, meanwhile, said it is assessing the labour codes development. “…welcome the government’s intent of implementation of labour reforms, and we are evaluating the changes which would have to be ushered in. The COSS is aligned with our existing priorities of providing safety, security, and welfare of our employees,” the company spokesperson said.