Swiggy vs Eternal: Which stock promises better value delivery post Q1 show?

Time of India

05-08-2025

Eternal
and
Swiggy
, two of India's top food delivery and quick commerce (QC) players, have emerged from the June quarter with distinct narratives. While both companies posted strong growth, Eternal's margin visibility, Blinkit-led momentum, and balance sheet strength have tipped brokerage sentiment clearly in its favour. Swiggy, though making progress on unit economics, continues to battle margin pressure and cash burn, leaving analysts divided on its near-term prospects.
Eternal draws analyst favour as Blinkit surges
Eternal, the parent of
Zomato
and Blinkit, reported a 55% year-on-year rise in B2C net order value (NOV) in Q1FY26. Blinkit, its quick commerce arm, delivered 140% YoY GOV growth, outpacing food delivery for the first time and marking QC as Eternal's largest segment.
'Q/C GOV is now ahead of foods, making Q/C the largest segment for Eternal,' noted Jefferies, adding that 'near-term margins have bottomed, and absolute losses should come down.' The brokerage, which had downgraded the stock in January over competition fears, reversed its stance, saying, 'We overestimated the competitive threat' and upgraded to a 'Buy' rating with a revised price target of Rs 400.
Goldman Sachs similarly upgraded Blinkit's GOV estimates by up to 9%, calling out 'elevated growth with improving margin outlook.' The brokerage said it forecasts Blinkit's EBITDA breakeven by December 2025 and raised its 12-month target price on Eternal to Rs 340. 'We see that acting as a catalyst for the stock,' the brokerage said, citing improving quick commerce margin trends and a shift to an inventory ownership model.
Emkay Global
expects that as Blinkit transitions to a first-party inventory model in its quick commerce operations, it will be able to expand its margins by around 100 basis points, thanks to better control and efficiency, even as it scales up to as many as 3,000 stores. Food delivery remains the cash-generating engine, with management projecting 15–20% growth in FY26.
Adjusted EBITDA margin in food delivery moderated slightly in Q1 to 4.2% of GOV, but Jefferies and Goldman Sachs both expect margin expansion over time, with the industry structure remaining favourable. Eternal ended Q1 with Rs 189 billion in cash, significantly higher than Swiggy's Rs 54 billion.
Swiggy shows signs of recovery but risks persist
Swiggy posted robust 45% YoY growth in B2C GOV, led by Instamart. However, rising costs and weak operating leverage weighed on margins. HSBC flagged the steep drop in profitability versus Eternal, noting: 'FD adj. EBITDA margin fell 50bp q-o-q in 1Q... quick commerce EBITDA loss still high at cINR9bn.'
Swiggy delivered a strong 45% year-on-year rise in B2C gross order value (GOV) in the first quarter, driven primarily by Instamart. But gains on the top line were offset by escalating costs and muted operating leverage. HSBC flagged the widening profitability gap with rival Eternal, observing that 'FD adjusted EBITDA margin fell 50bp q-o-q in 1Q... quick commerce EBITDA loss still high at Rs 9 billion.'
Swiggy's quick commerce arm, Instamart, saw strong AOV-led growth (16% q-o-q), aided by its MaxxSaver initiative. But HSBC said, 'Operating leverage is key now in the near term,' as orders per day per store remain about 40% lower than Blinkit.
Cash burn for Q1 stood at Rs 13 billion, and while HSBC projects this to decline to Rs 8 billion by Q4, the brokerage cautioned, 'If capex and working capital investments do not fall sharply in coming quarters, we worry cash exhaustion could continue to be significant.' The brokerage retained a 'Hold' rating with a Rs 430 price target.
Morgan Stanley raised its target to Rs 450, acknowledging Swiggy's improving unit economics but added, 'We still prefer Eternal over Swiggy.' The brokerage flagged risks around cash depletion and 'weaker store addition or space addition vs. Blinkit.'
Jefferies took a contrarian view, upgrading Swiggy to a 'Buy' rating and lifting its price target to Rs 500. The brokerage described Swiggy as a 'high risk–high reward' play, saying, '1Q profitability marked the trough,' with management pausing store additions and focusing on profitability. The brokerage sees upside from the platform's growing non-grocery mix and stabilised 10-minute delivery via Bolt.
The Verdict: Execution vs Upside
Brokerages agree that Swiggy trades at lower valuations than Eternal, but that discount reflects execution risk. As HSBC put it, 'Valuations [are] lower than Eternal, but steep execution pick-up is needed.'
Eternal, on the other hand, has delivered consistently in both food and quick commerce, with Blinkit's accelerated growth and shift to a first-party inventory model seen as value-accretive. Goldman Sachs forecast Blinkit reaching 5–6% EBITDA margins by FY30 and called the Q1 commentary 'positively surprising.'
With cash burn narrowing and store productivity improving, Swiggy may yet turn sentiment, especially if it delivers on its margin targets and monetises its stake in Rapido. But for now, brokerages are overwhelmingly aligned: Eternal, with its superior execution, scale advantage, and margin visibility, is the better buy post-Q1.
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Paytm, Swiggy among 7 stocks that Jefferies upgraded after Q1 results
(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)