Food-delivery stocks have staged an uneven recovery over the past month. While Eternal Ltd has clawed back about 5%, trimming its year-to-date decline to over 5%, Swiggy Ltd continues to trail. The stock is down nearly 38% this year and 7% over the past month.
Eternal has maintained a lead over Swiggy because of the superior scale and execution of its quick-commerce business, said market participants. During the March quarter, Eternal’s net order value (NoV) jumped 95% year-on-year to ₹14,386 crore, while Swiggy saw a 60.3% rise, bringing its NoV to ₹5,675 crore.
Pranav Kshatriya, senior research analyst-institutional equities at Emkay Global, explained that Eternal-owned Blinkit's key strengths lie in its market leadership, best-in-class execution, superior dark-store productivity and supply chain, a proven path to profitability, and its ability to benefit from expansion into categories such as electronics, jewellery, and general merchandise.
However, he said, its leadership position also makes it the primary target of intense competition from Amazon, Flipkart and Zepto.
For Swiggy Instamart, Kshatriya sees positives in its shift towards sustainable unit economics, growing traction in its private label Noice, and its target of achieving contribution-margin break-even by Q1FY27, which could improve earnings visibility.
On the flip side, he highlighted, Instamart must balance profitability with network expansion while taking on well-funded rivals and new entrants.
Widening gap
Even JM Financial Institutional Securities expects 1QFY27 to reinforce the widening divergence between the listed quick-commerce competition, as it sees Blinkit significantly outperforming Instamart on growth.
Brokerages remain largely positive on both stocks, showed Bloomberg data. Eternal has 31 ‘buy’ recommendations, with only three firms advising a ‘sell’. Swiggy, meanwhile, has 23 ‘buy’ calls, four ‘hold’ ratings, and three ‘sell’ recommendations.
Shobit Singhal, research analyst at Anand Rathi Institutional Equities, expects Blinkit to stay ahead of Instamart, with Blinkit's NoV likely to grow in the low- to mid-double digits sequentially, compared with Instamart's 3-5% quarter-on-quarter (q-o-q) growth.
He believes Swiggy's underperformance stems from the fact that Instamart is yet to turn profitable, while Blinkit crossed that milestone two quarters ago.
He, however, said the food-delivery businesses of both Swiggy and Zomato are expected to deliver a healthy 18-20% growth, along with steady margin expansion.
Valuations
On valuations, Singhal noted that Zomato is currently trading at 2.3 times its NoV, compared with 1 times for Swiggy. “Lower losses, steady growth and a clear path to profitability could be the key triggers for Swiggy going forward,” he said.
Anand Rathi has a ‘buy’ rating on Eternal with a target price of ₹400, while it recommends ‘hold’ on Swiggy with a target price of ₹310.
The long-term opportunity remains strong, according to Kshatriya of Emkay Global. Interactions with stakeholders suggest that quick commerce has found a strong product-market fit, with tier-II and tier-III cities emerging as key growth engines.
“Beyond grocery, the addressable market continues to expand into categories such as electronics, jewellery and general merchandise, providing a long runway for growth," he said.
From a valuation perspective, Emkay Global remains constructive on both players. The brokerage has maintained its ‘buy’ rating on Eternal and Swiggy, with target prices of ₹370 for the former and ₹350 for the latter, reflecting its confidence in the structural growth of the quick-commerce ecosystem despite elevated near-term competitive intensity.