Swiggy, Eternal shares jump up to 20% in one month. Should you buy or avoid?

The shares of food delivery and quick commerce giants Swiggy and Eternal have seen a sharp surge recently, rallying up to 20% in just one month, with analysts highlighting indicators for further upside ahead, although some caution is warranted

Swiggy shares have gained more than 13% in one month, while Eternal shares rallied over 20%. The rally was boosted after Swiggy's foreign ownership dropped below 50% and bullish brokerage views on the long-term growth prospects of both companies.

Swiggy's domestic ownership rises above 50%

Swiggy last week announced that domestic ownership had crossed the 50% mark. This came after Swiggy shareholders in May failed to pass a resolution to classify it as an Indian-owned and controlled company (IOCC), a status that would let its quick commerce arm Instamart own inventory directly, improving margins and supply chain control.


Under India’s current Foreign Exchange Management Act (FEMA) provisions, a company can qualify as an IOCC only if both ownership and control rest with resident Indian citizens or eligible Indian entities, including through a board composition and nomination framework that supports domestic control. IOCC status would allow Instamart to operate with fewer restrictions under India's FDI policies and allow it to own its inventory, like Blinkit, the market leader.

Also read:Swiggy's foreign shareholding falls below 50%. What it means for investors

Bullish brokerage calls for Eternal

Motilal Oswal in a recent report said that the food delivery business which had witnessed a slowdown earlier has now accelerated in the third quarter. “The improvement is being driven by targeted activation of budget-conscious customers and curated affordable meal offerings (e.g. meals under Rs 250). While NAOV has moderated, higher order frequency and new customer additions are driving volume growth. We continue to view FD as a stable duopoly and expect growth to remain in the range of ~18-20% over the medium term,” it said.

According to the domestic brokerage, quick commerce remains the bigger story. In this space, competition is intense and growth has moderated from the exceptional pace of the last two years, with FY27 estimates now down to around 70% YoY growth (vs 85-100% earlier). Despite this, Blinkit's position continues to strengthen, Motilal said, highlighting attractive valuations.

While Eternal and Swiggy investors worry about Amazon and Flipkart’s entry into India’s tight spaced quick commerce segment, analysts at Anand Rathi believe that Blinkit is the undisputed market leader that is structurally well-positioned in this space to handle the heat.

Also read:Amazon’s rapid delivery push triggers $15 billion rout for Eternal, Swiggy

What lies ahead for Swiggy shares?

Swiggy has recovered sharply from its June lows and the trigger is more about ownership and flows than a change in the burn, said Harshal Dasani, Business Head at INVasset PMS. “Foreign holding has fallen to roughly 49.8%, lifting domestic ownership above half, which improves the stock's index-inclusion math and the passive flows that can follow, and the expansion of its Food on Train network added to the momentum. Underneath, two businesses are moving in opposite directions,” he added.

Food delivery is the best it has looked in nearly four years, Dasani said, adding that Instamart is the offset, with management has not put a date on breakeven.

“So the question is whether Instamart's contribution margin keeps closing toward zero while competition stays this intense. If it does, the profitable food-delivery core reframes the whole entity; if the cash burn persists, the rally will struggle to hold. Sell-side targets sit wide, roughly 270 to 350 for most houses against outliers near 740, which itself signals how unsettled the economics are,” according to Dasani.

Technical view on Swiggy

Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, highlighted that Swiggy has witnessed a double bottom neckline breakout on the daily chart, backed by a significant surge in trading volumes, lending credibility to the breakout.

The Rs 268–265 zone is expected to act as a strong support on any throwback, according to the analyst. As per the measured move of the double bottom pattern, the stock has the potential to rally towards the Rs 305–310 zone, provided it sustains above the breakout level, he added.

Hitesh Rathi, Technical Analyst of Equity & Derivatives at Angel One, however said that there is still a lack of clarity over whether the stock's primary trend has reversed despite the remarkable turnaround witnessed over the past week. “It would be prudent to wait for a follow-through buy before turning decisively bullish. Such a confirmation would not only allow the recent sharp advance to undergo a healthy time-wise consolidation but would also provide greater confidence that the current recovery has sufficient strength to evolve into a sustained uptrend,” he added.

What lies ahead for Eternal shares?

Zomato and Blinkit-parent Eternal’s recent sharp gains were helped by index-rejig expectations and a strong March quarter, Dasani said. He added that the substance behind the move is Blinkit turning EBITDA positive for the first time, with adjusted EBITDA of Rs 37 crore against Rs 4 crore the previous quarter and net order value up about 95%.

However, the analyst cautioned that the risk sits in the valuation. The stock trades near the upper end of its range on a multiple that already prices years of scaling, so the debate is whether Blinkit's margin builds from a thin 0.3% of order value or gets competed away as new entrants push in. “Sell-side targets cluster between roughly Rs 283 and Rs 360 and average near Rs 346, which frames measured upside rather than a fresh re-rating unless quick-commerce profitability compounds faster than the market expects,” he said.

Technical view on Eternal

Eternal has also delivered a horizontal trendline breakout on the daily chart and has followed it up with a sharp upside move, Sudeep Shah from SBI Securities explained. The stock is trading comfortably above its key short and long-term moving averages, reflecting a strong bullish structure.

“The rising ADX signals strengthening trend momentum, while the upward-sloping MACD indicates sustained buying interest. As long as the stock holds above the Rs 270–275 support zone, the ongoing uptrend is likely to extend further,” according to the analyst.

Hitesh Rathi, Technical Analyst of Equity & Derivatives at Angel One, said that the technical setup for Eternal inspires confidence, with the stock exhibiting signs of a trend reversal across multiple timeframes following a healthy price correction over the past eight months. “While the broader technical structure remains constructive, the sharp rally witnessed over the past few weeks has stretched the stock in the near term. A healthy pullback or time-wise consolidation from current levels would improve the risk-reward profile and provide a more favourable entry opportunity for fresh longs,” he added.

Also read: Swiggy among 5 stocks flashing bullish signals, hinting at a possible uptrend

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