Investors trying to choose between Swiggy and Eternal (earlier known as Zomato) shares this festive season are facing a mixed picture. While Eternal has touched an all-time high, Swiggy continues to trade close to its IPO price, raising questions about which stock offers better prospects in the near to medium term.
Market experts say the two companies are in very different positions when it comes to earnings visibility and investor confidence. Eternal has shown consistent performance and continues to attract positive coverage from brokerages, while Swiggy is struggling to convince the market about its profitability path.
Gaurang Shah, Senior Vice President at Geojit Financial Services, explained the contrast: “If I compare between Swiggy and Eternal, which was known as Zomato earlier, Eternal has been on a lifetime high, while Swiggy has been struggling in terms of performance and is somewhere close to its IPO price of Rs 385–400. The problem for Swiggy is earnings visibility and pressure on the bottom line. The recent stake sale of Rapido may be a short-term trigger, but it will not materially change the company’s earnings. How the proceeds are used will be important, but at this point, we do not have coverage on Swiggy. Eternal, on the other hand, continues to have positive coverage.”
SWIGGY’S INSTAMART GROWTH
One bright spot for Swiggy has been the growth of its quick-commerce arm, Instamart. The platform saw more than 100% year-on-year growth recently, with the average order value (AOV) rising 26% to Rs 612. However, despite this growth, the adjusted EBITDA remains negative at -15.8%. Analysts say this indicates that while demand is improving, Swiggy still has a long way to go before reaching profitability.
The market will also be watching closely during the ongoing festive season to see if Swiggy can benefit from higher demand in food delivery and grocery orders. But so far, clarity on its earnings outlook remains limited.
ETERNAL’S STRONGER POSITION
In contrast, Eternal has managed to build greater investor trust. With strong growth in its food delivery business and expanding revenue streams, it has reached fresh highs in the stock market. Analysts say the company’s clear path towards improving profitability and its ability to scale operations more efficiently have given it an edge over Swiggy.
For now, brokerages are more comfortable backing Eternal. Investors see it as a more stable play compared to Swiggy, which still carries uncertainties around its bottom line and business strategy.
AUTO SECTOR GAINS ATTENTION
Alongside the debate over food delivery stocks, the auto sector has also been in focus this festive season. Shah pointed out that automobile companies have reported strong numbers in September. “Maruti sold historical high numbers of 30,000 vehicles, Hyundai reported about 11,000, and Tata Motors also gave a good set of figures. Since the GST rate cut announced in August, combined with festive discounts, demand has been very strong. Many customers waited until late September to take advantage of these benefits, boosting sales numbers sharply,” he said.
He added that most auto manufacturers are also discussing higher capital expenditure to meet growing demand, while exports remain competitive. “The long-term story for the Indian automobile industry remains intact. Though some profit booking is happening after the recent rally, the outlook for the sector continues to be positive,” Shah noted.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
