Eternal vs Swiggy: Deja Vu in QC battle, but this time could be different

After a brief period of calm & improving profitability, both Eternal (Zomato) & Swiggy appear set for another showdown, reminiscent of the fiery land-grab phase that began in late 2024, analysts said.

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Eternal vs Swiggy, Quick Commerce segment: Another round of competition seems to be brewing in India’s fast-growing quick commerce (QC) and food delivery (FD) segments – and market watchers are getting a sense of deja vu. 

 

After a brief period of calm and improving profitability, both Eternal (Zomato) and Swiggy appear set for another showdown, reminiscent of the fiery land-grab phase that began in late 2024, analysts said.

 

According to a report dated November 3 by Motilal Oswal Financial Services Limited (MOFSL), commentary from the companies’ Q2FY26 earnings calls indicates that the easing competitive intensity seen in the past few quarters may soon give way to a renewed push for growth.

 

“Both Eternal and Swiggy have seen improvements in their profitability on the back of reduced competitive intensity and slower dark store rollouts,” MOFSL analysts noted. “However, this trend could see a pause as Swiggy, armed with a potential ₹10,000 crore in fresh funds, Zepto’s recent fundraise, and Eternal’s strong balance sheet could set off another land-grab phase in quick commerce.”

Back to the battlefield

 

The setup, MOFSL said, ‘resembles the setup seen last year,’ when November 2024 marked the beginning of an aggressively competitive phase. Both listed and unlisted players had ramped up dark-store expansions and marketing spends, which led to steep cuts in margin expectations and sharp stock corrections – Eternal and Swiggy shares had fallen 21 per cent and 27 per cent, respectively, between November 2024 and March 2025.

 

While both companies rebounded strongly in FY26 on improved profitability, the new wave of fundraises could bring discount wars and cash burn back into play – albeit in a more controlled form.  ALSO READ | Tata Consumer back in high-growth lane; analysts raise targets on strong Q2

Competition heats up again

 

After two quarters of relative restraint, players are once again turning the heat up on marketing and user acquisition, analysts noted.

 

Motilal Oswal observed that in Q1FY26, ‘market expectations and guidance were focused on improving profitability due to easing competition.’ But in Q2FY26, the tone ‘turned more aggressive, with a renewed push for discounts and brand marketing.’

 

Swiggy has rolled out its nationwide ‘Quick India’ campaign, executed a brand refresh, and launched reactivation drives. Eternal, meanwhile, reintroduced free Zomato Gold promos and large-scale food offers, while both Swiggy and Zepto unveiled ‘No Fee’ campaigns, removing delivery, handling, and surge fees.

 

“As a result, we are back where we were in November 2024,” the brokerage said, “with all the top players expected to increase competitive intensity on the back of fresh capital raises.”

This time is different

 

Despite the surface similarities, Motilal Oswal believes this cycle may unfold differently. The brokerage argues that “dark store additions will be lower for both platforms, particularly Swiggy, which is moderating new launches by ~90 per cent after last year’s aggressive buildout.”

 

In the previous phase, Swiggy’s throughput, or orders per day per dark store, had dropped 25 per cent. This time, however, the brokerage expects throughput to improve by 30 per cent over the next four quarters. “This is a key margin lever, in our view,” Motilal Oswal said, adding that most of Swiggy’s newly opened stores are already past the 4-6 month breakeven window, which should unlock operating leverage.

 

Eternal, too, remains well-placed. “Its network remains efficient and its QC business is near the breakeven; the losses are entirely driven by discretionary marketing spends,” the brokerage noted.

Valuation View: Swiggy the preferred bet 

 

Motilal Oswal continues to view the food delivery business as a balanced duopoly, projecting 20-22 per cent Gross Order Volume (GOV) growth for both players over FY26-27. The brokerage assigns a 30x FY27E enterprise value (EV)/Ebitda multiple to the FD segment, citing steady margins and strong user stickiness.

 

In the QC space, while the setup “looks similar to the prior cycle,” Motilal Oswal expects “lower burn intensity and faster margin normalisation as dark-store throughput improves.”

 

At current valuations, the brokerage prefers Swiggy. “Our implied EV/GMV multiple of 0.5x FY27E for QC represents a ~60 per cent discount to Eternal’s 1.2x, and we expect this discount to narrow,” it said.

 

Motilal Oswal reiterated its ‘Buy’ rating on both stocks, with a target price of ₹550 for Swiggy (36 per cent upside) and ₹410 for Eternal (27 per cent upside), but stressed that Swiggy offers stronger relative valuation comfort.

 

As the quick commerce race gears up once again, investors may be in for some familiar moves, but if the brokerage’s analysis is right, this deja vu moment could end with a very different outcome.