Eternal vs Swiggy: The quick commerce war is on. Which stock should you own after Q1?

The quick commerce race has been heating up for some time, but the June quarter has made the contest between the two listed leaders even more compelling. Strong growth, improving operating metrics and ambitious long-term targets have set the stage for an intense battle between Swiggy and Eternal.

For millions of urban Indians, quick commerce has evolved from a novelty into a habit. As the market scales up, the battle is increasingly shifting towards market share rather than near-term profitability.

In the stock market, Eternal, formerly Zomato, climbed to a record high in March this year before witnessing heavy selling pressure. Foreign institutional investors have reduced their stake in the food delivery company for five consecutive quarters. Eternal shares are currently down 15% from their peak, while Swiggy has seen a steeper correction, with the stock down 41% from its own 52-week high.

What are experts saying as the war heats up?

Nomura has maintained its Buy rating on Swiggy while lowering its target price to Rs 435, implying a potential upside of around 47%. The brokerage said Instamart is prioritising growth over margins and remains adequately funded to navigate near-term challenges.

Nomura expects Instamart to remain loss-making through FY27 and FY28, and has raised its adjusted EBITDA loss estimates to Rs 3,100 crore for FY27 and Rs 2,300 crore for FY28 from its earlier projections of Rs 2,100 crore and Rs 500 crore, respectively.

The brokerage, however, believes Swiggy is well positioned to absorb these losses, supported by cash generation from its food delivery business and a cash balance of Rs 14,300 crore.

Rs 10,000-crore EBITDA target

Swiggy has laid out an ambitious roadmap to achieve Rs 10,000 crore in adjusted EBITDA by FY31, with growth expected to come from improving efficiencies in its core food delivery business, expanding Instamart and scaling up Dineout.

The company also expects Instamart's gross order value (GOV) to increase four to five times to Rs 1.5 lakh crore by FY31 from Rs 28,000 crore in FY26. The platform currently serves more than 14 million monthly active buyers across 130-plus cities and is moving closer to EBITDA breakeven as unit economics improve and store density increases.

But not all are bullish on Swiggy stock

JM Financial said Swiggy's Q1FY27 results reinforce its view that meaningful profitability improvement in Instamart will require greater scale. The brokerage noted that after focusing on contribution margins over the past few quarters, the company has shifted its attention back to accelerating growth.

While management reiterated its medium-term growth guidance of 18-20%, Q1FY27 was the first quarter in recent periods where growth fell short of expectations. More importantly, management disclosed that nearly one-third of Toing users overlap with Swiggy's core food delivery users, suggesting a degree of order cannibalisation.

Will Eternal's Blinkit overpower Swiggy?

Jefferies said the June quarter highlighted the importance of quality growth rather than simply chasing market share. According to the brokerage, food delivery growth accelerated alongside stronger-than-expected profitability, while quick commerce delivered a healthy performance despite falling short of optimistic expectations.

The brokerage said the key takeaway was management's growing confidence that competitive intensity in quick commerce has become more predictable and that value-led food delivery is unsustainable. Blinkit is not pursuing a short-term discounting strategy, and management indicated that it is comfortable with the broader market growing faster as a result. Jefferies has a target price of Rs 415 on the stock.

Eternal has also raised its steady-state EBITDA margin expectation for Blinkit to 6% of NOV from the earlier 5-6%, supported by efficiencies from larger stores and warehouses, deeper assortments and improved working capital management. The company expects net working capital days to decline to 12 days from 18 days in the steady state.

Blinkit reported faster NOV growth along with improving confidence around profitability and cash generation. Zomato recorded its fastest growth in six quarters, with limited impact from emerging no-commission platforms. At the same time, newer businesses such as District and Bistro continue to expand the ecosystem and deepen customer engagement.

Management also guided towards the upper end of its long-term margin range, with a reported EBIT margin of around 4% and an adjusted EBITDA margin of around 6%, compared with the earlier guidance range of 5-6%.

As the quick commerce market continues to expand, the June quarter underscored the different paths being taken by the two listed players. While Swiggy is focused on scaling its business and gaining market share, Eternal is placing greater emphasis on profitability and operational efficiency. With both companies laying out ambitious long-term plans, investors are likely to keep a close watch on how each balances growth, margins and execution in the quarters ahead.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)