Nomura said that Swiggy’s food delivery business is now on a steady profitability trajectory and is expected to remain a key cash generator. While the company’s quick commerce vertical still holds a challenger position, profitability in this segment is also likely to improve.
The brokerage added that Swiggy is well funded to scale its quick commerce business further, and therefore the risk of equity dilution remains low. However, it cautioned that a broader macroeconomic slowdown could pose risks to growth assumptions in the online food delivery space.Nomura has also reiterated a ‘Buy’ rating on Eternal and raised its price target to ₹370 per share from ₹300 earlier.
The brokerage expects Eternal’s food delivery segment to continue on a steady growth path with improving profitability.Meanwhile, its quick commerce business is witnessing contribution margins bottoming out, and the inventory-led model is expected to aid margin expansion going forward.
Key risks for Eternal, according to Nomura, include a potential slowdown in the food delivery segment and heightened competition in quick commerce.
The brokerage has valued Eternal by assigning a 40x FY2028 EV/EBITDA multiple to its food delivery business and a 1.2x EV/GOV multiple to its quick commerce vertical.
27 analysts have coverage on Swiggy, of which 22 have a ‘Buy’ rating, three say ‘Hold’, while two have a ‘Sell’ recommendation.
For Eternal, 29 out of the 33 analysts covering the counter have a ‘Buy’ rating on it, while the other four have a ‘Sell’ rating.
Shares of Eternal ended Friday’s session 1% higher at ₹329.50, while those of Swiggy settled 3.94% higher at ₹439.75.
