Analyst picks Eternal, Swiggy as top quick commerce bets; check targets

Chandan Taparia, head of derivatives and technicals, Wealth Management at Motilal Oswal Financial Services, has recommended buying shares of Eternal and Swiggy

Quick Commerce 2.0: Competition returns, but the playbook has changed

 

India’s food delivery and quick commerce (QC) landscape is poised for another phase of heightened competition, echoing the intensity last witnessed in late FY25. However, unlike the earlier cash-burn cycle, this round appears more disciplined, supported by better network utilisation and improving operating leverage across leading platforms.

 

After a few quarters of easing rivalry and improving profitability, sector commentary for Q2FY26 signals a renewed push toward market share expansion. Multiple platforms are ramping up marketing spends, discounts, and customer reactivation campaigns; a trend reminiscent of the aggressive phase between September 2024 and April 2025, when margin expectations sharply declined. The renewed funding momentum across leading players has further reignited the appetite for growth.

 

Yet, the context today is different. Dark store additions, a key capital and cost driver, are expected to remain significantly lower than in the previous cycle. Major players are focusing on throughput improvement which is measured by orders per day per store and is projected to rise by nearly 30 per cent over the next four quarters. Most recently opened dark stores have already crossed their 4–6-month breakeven thresholds, providing a solid base for operating leverage and margin normalisation.  ALSO READ | Eternal below 100-DMA, Swiggy at 200-DMA; how to trade these 2 stocks? 

The QC segment remains central to India’s evolving consumption model, with efficiency gains, order density, and average order values emerging as crucial profitability levers. For food delivery, the market continues to exhibit a stable duopolistic structure with balanced shares and resilient user stickiness. Gross order value (GOV) growth of around 20–22 per cent over FY26–27 underscores the sector’s maturing yet steady expansion trajectory.

 

In the medium term, the investment case for digital food delivery and QC platforms rests on three structural pillars: rationalized infrastructure expansion, disciplined capital deployment, and accelerating throughput efficiency. While short-term competitive intensity could weigh on margins, the sector’s fundamental momentum remains intact, supported by robust consumer adoption, improving network economics, and sustained scale efficiencies.

 

Overall, India’s food delivery and quick commerce sector appears set for a recalibrated growth phase — one where competition may intensify again, but the contours of profitability are firmer, execution sharper, and the burn cycles notably shorter.  ALSO READ | What should investors do with Eternal (Zomato) after Q2? Brokerages decode

Eternal – Target Price: ₹410

Eternal is demonstrating strong growth momentum as it transitions to an inventory-led model, reflected in a 90 per cent Q-o-Q and 183 per cent Y-o-Y jump in net revenue driven by full-value recognition of goods sold rather than just commissions. The quick commerce business (Blinkit) posted an impressive Q2FY26 (137 per cent Y-o-Y increase) in monthly order value, underpinned by operational scale-up and store expansion.  Contribution margins improved from 3.9 per cent to 4.6 per cent, thanks to the inventory-ownership model contributing approximately 80 per cent of order value and boosting gross margins. Franchise and e-commerce operations are growing their share of total revenues, signifying a diversified and scalable business model. At the same time, the consolidated Ebitda margin improved, indicating early operational leverage beginning to flow through despite elevated marketing spend. These developments collectively strengthen Eternal’s platform, scale and margin improvement trajectory. We are positive on Eternal given long-term potential of Blinkit as a generational opportunity in retail, grocery, and e-commerce disruption.  ALSO READ | Eternal vs Swiggy: Deja Vu in QC battle, but this time could be different

Swiggy – Target Price: ₹550

Swiggy’s medium-term outlook remains robust as it advances toward profitability, driven by operating leverage and sustained efficiency gains in both food delivery and Instamart. Strong cost discipline, targeted marketing, and optimised incentives helped reduce cash burn by 50 per cent QoQ in 2QFY26. Management expects Instamart to achieve breakeven by 1QFY27, supported by improved dark-store throughput and a higher average order value(AOV).  The rising contribution from non-grocery categories (26 per cent of GOV) and steady food delivery margins reinforce consistent progress in unit economics. The planned ₹100b fundraise enhances financial flexibility to navigate intensifying competition. With improving profitability visibility, efficient capital deployment, and a disciplined growth approach, Swiggy remains well positioned for sustainable value creation.

 

(Disclaimer: Chandan Taparia is the head of derivatives and technicals, wealth management at Motilal Oswal Financial Services. Views expressed are his own.)