Eternal, Swiggy shares fall up 5% amid heightened competition; what's next?

Extending their ongoing weakness, shares of Swiggy and Eternal tumbled up to 5 per cent during trading sessions on Tuesday. The quick commerce and food delivery giants have cracked up to 25-35 per cent from their respective 52-week highs, amid the rising competition from peers like Zepto, Amazon, Jio & others. Brokerage firms continue to remain mixed on these stocks.

Shares of Swiggy Ltd tanked 4.88 per cent to Rs 359.55 on Tuesday, with its market capitalization slipping below Rs 1 lakh crore mark. The stock is down 35 per cent from its 52-week high at Rs 546.45. On the similar lines, Eternal Ltd fell 1.96 per cent to Rs 276.25 with a total mcap slipping below Rs 2.7 lakh crore.

The latest fall on Tuesday has also taken Swiggy's shares below their QIP price of Rs 375, at which the company had raised Rs 10,000 crore to boost its war chest. The stock now also trades below its IPO price of Rs 390 apiece. Their arch rival in the quick commerce space, Zepto, also confidentially filed its DRHP with Sebi to launch its IPO.

Nuvama Institutional Equities anticipates Eternals' food delivery NOV to grow 2.2 per cent QoQ/14.1 per cent YoY while adjusted EBITDA margin as percent of NOV to be 5.4 per cent. Blinkit NOV to grow 14.4 per cent QoQ/122 per cent YoY while absolute adjusted EBITDA loss to be Rs 130 crore. Consolidated EBITDA margin shall contract 10bp QoQ, it said.

"For Swiggy, we forecast food delivery GOV shall grow 3.8 per cent QoQ/19.2 per cent YoY while adjusted EBITDA margin as per cent of GOV shall be 3 per cent. Instamart GOV to grow 13.6 per cent QoQ/104.1 per cent YoY while absolute adjusted EBITDA loss shall be Rs 920 crore. Consolidated EBITDA margin to decrease 10bp QoQ," Nuvama adds.

In a nutshell, it sees Eternal and Swiggy to lead in terms of revenue growth. It recently initiated with 'buy' rating on Swiggy with a target price of Rs 510, while It has the same rating for Eternal with a target price of Rs 400 apiece. Nirmal Bang Institutional Equities also has a 'buy' rating on both the counters with a target prices of Rs 523 and Rs 357, respectively.

On the other hand, Ambit has retained its preference for Eternal over Swiggy. The report points to stronger market positioning and better operational efficiency as factors supporting Eternal, while reaffirming 'sell' ratings for both stocks with revised target prices of Rs 210 for Eternal and Rs 330 for Swiggy.

Ambit’s assessment is based on both companies facing a highly competitive landscape, but Eternal is positioned to optimise outcomes in this environment. It highlights sector-wide constraints, such as India’s low urbanisation rate of 36 per cent, limited dark store potential (12,000–16,000), and affordability limits, all of which cap user and order growth.