Global brokerage Jefferies compared India's two largest food delivery and quick-commerce companies - Eternal (parent of Zomato and Blinkit) and Swiggy - and concluded that Eternal continues to lead on scale, profitability, and execution, while Swiggy is steadily closing the gap and could offer more upside for investors willing to take on more risk.
In the last nine quarters, Jefferies said Eternal has strengthened its market leadership through better execution, stronger unit economics, and a significantly larger operating scale.
Eternal Continues to Dominate
Jefferies states that Eternal is still the leader in food delivery and quick commerce.
Its quick-commerce platform Blinkit has an enormous advantage over Swiggy Instamart in many key metrics such as:
Gross Order Value (GOV)
Number of dark stores
Monthly transacting users
Order volumes
Overall profitability
The brokerage estimates that Blinkit accounts for nearly 74% of the quick-commerce Gross Order Value, while Instamart represents about 26% of it.
Blinkit operates 68% of dark stores in the industry, versus 32% for Instamart, which gives Eternal a large-scale advantage.
Swiggy Improving Profitability
Despite losing out to Eternal in market share, Jefferies said Swiggy’s strong profitability was impressive.
The brokerage pointed out that Swiggy's food delivery EBITDA has increased fivefold over the past year, compared to a two-fold growth for Eternal during the same period.
Thus, Swiggy is closing the profit gap at this time but at the same time investing in expanding the business.
The final positive aspect of this year for Instamart is that it has now reached contribution margin break-even, which is a major step towards efficiency.
High-Risk, High-Reward Opportunity
According to Jefferies, if Swiggy were to replicate its improving profitability in the quick-commerce segment and keep growing at a disciplined pace, the company could become a high-risk, high-reward investment.
Although still not far ahead of Eternal in terms of market share and scale, sustained improvement in operating leverage could shorten the valuation gap between the two companies over time.
Eternal Still the Preferred Choice
Despite Swiggy’s progress, Jefferies still recommends Eternal as their preferred investment in India’s internet and consumer technology sector.
The brokerage called Eternal a "must-own" stock for long-only portfolios, citing:
Market leadership
Superior execution
Better unit economics
Strong profitability
Larger operating scale
In this way, Jefferies said, these strengths justify Eternal's premium valuation.
Competition Is Heating Up
Still, Eternal is the most relevant, but Jefferies believes competition between the two companies is becoming more interesting.
The brokerage also observed that Swiggy seems more innovative in multiple new initiatives, and if it continues to improve profitability while scaling Instamart efficiently, it could gradually close the performance gap with Eternal.
The choice mainly depends on the investor’s risk appetite:
- Eternal may appeal to those looking for stability, market leadership, and proven execution. S
- wiggy may attract investors willing to accept higher risk in exchange for potentially higher long-term returns if its turnaround continues.
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