Zomato shares may see more than 24 percent upside in a year, brokerage firm UBS said in a note on May 15 but expressed a slight caution for existing online food delivery players against the new government funded Open Network for Digital Commerce (ONDC) platform.

The Switzerland-based brokerage says Zomato should not be worried immediately about users moving to ONDC but is of the view that incumbent platforms (like Zomato and Swiggy) could be forced to increase discounts or reduce commissions. It will keep an eye on ONDC's progress.

This comes as many users have highlighted the price difference in ordering food from ONDC as against Swiggy and Zomato. One user pointed out that a McDonald’s burger on ONDC costs less than half of what a consumer pays on Swiggy and Zomato. Another user pointed out how the same pizza was 20 percent cheaper on ONDC.

Also watch: Will ONDC Outdo Zomato and Swiggy?

UBS, which has a buy rating on Zomato’s stock with a target price of Rs 80, also pointed out that the ordering process is relatively smooth on ONDC with a third party rider fulfilling the order.

How is ONDC different from Zomato and Swiggy

Unlike Swiggy and Zomato, ONDC is not an app or a platform. It is an open source network that connects sellers, buyers and logistic players to fulfill an order.

Currently, there are seller partners such as Paytm, Magicpin, PhonePe, etc that host ONDC on their apps – they are the storefront from where the consumer can place an order for food, grocery, etc.

Also Read: Can ONDC really disrupt food delivery, take on Swiggy and Zomato?

This is also where the business (restaurants in this case) list themselves with their catalogue (or menu). Once you place an order, its passed on to the business which then fulfills the order and there is a third-party logistics partner like Shadowfax, Dunzo, Shiprocket, etc that can deliver the order. The restaurant can choose to fulfill the order themselves as well.

Why Zomato and Swiggy may be forced to offer more discounts, reduce commissions

Platform providers like Paytm, etc charge a commission and the logistics partner charges a fee – to the business. While Swiggy/Zomato charge a commission of anywhere between 18-25 percent percent from restaurants, the platform partners charge only 2-6 percent and around Rs 35 as delivery fee should they choose to use the service of a third-party logistics provider.

The lower commission makes orders through ONDC a better proposition for restaurants.

Also read: Can Blinkit be a 'golden egg' for Zomato?

Sagar Daryani, Vice President, National Restaurant Association of India (NRAI) earlier told CNBC-TV18 that restaurants currently don’t make money on delivery due to high commissions. With commissions as low as 2-4 percent on ONDC, Daryani says the unit economics are better for restaurants, and they can pass on the savings to consumers in terms of lower prices.

Track latest stock market updates on CNBCTV18.com's blog