Eternal vs Swiggy: MOFSL shares its preference, target prices for both stocks

MOFSL on Tuesday said it remains constructive on India’s online food delivery space, viewing it as a stable duopoly between Eternal (erstwhile Zomato) and Swiggy. It prefers Swiggy at the current juncture, citing greater relative valuation comfort and stronger operating leverage potential in Quick Commerce (QC). Swiggy’s QC business trades at a 60 per cent discount to Eternal on FY27E EV/GMV, and MOFSL expects this gap to narrow as throughput and take rates improve.

The brokerage anticipated 20–22 per cent gross order value (GOV) growth for the Food Delivery (FD) segment over FY26–27 and values the FD business at 30 times EV/Ebitda, underpinned by a steady margin trajectory and high user stickiness.

"Swiggy remains our preferred pick on relative valuation comfort as its 0.5 times FY27 EV/GMV multiple still trades at a 60 per cent discount to Eternal’s 1.2 times. We reiterate Buy on Swiggy with a target price of Rs 550 (36 per cent upside) and Eternal with a target of Rs 410 (27 per cent upside)," MOFSL said.

In QC, MOFSL noted a backdrop reminiscent of the previous cycle, but with lower burn intensity and scope for faster margin normalisation as dark-store utilisation rises. It highlighted Swiggy’s moderation in new store additions — nearly 90 per cent lower than last year — as a key margin lever, with throughput expected to improve 30 per cent over the next four quarters. Eternal’s QC network already operates efficiently and is close to breakeven, with losses largely driven by discretionary marketing spends.

Both players have posted profitability improvements, thanks to reduced competitive intensity and slower rollout of dark stores in recent quarters. However, commentary from Q2FY26 suggests this stability may be tested as capital availability improves. Swiggy’s potential Rs 10,000 crore fundraise, Zepto’s recent capital raise and Eternal’s solid balance sheet could revive a fresh land-grab phase in QC, similar to the elevated investment seen from late-2024.

Overall, MOFSL sees FD growth remaining robust with a balanced duopoly structure intact. It reiterated Buy on Swiggy, supported by valuation comfort and QC operating leverage. It also retanied Buy on Eternal (Zomato), backed by structural QC tailwinds and scale advantages.