Shares of Swiggy jumped nearly 8 percent in intra-day trade on Tuesday, July 22, after Nirmal Bang Institutional Equities initiated coverage on the stock with a ‘Buy’ rating and a target price of ₹500, indicating an upside of over 26 percent. The brokerage also initiated coverage on Eternal Ltd—the parent of Zomato—with a ‘Buy’ call and a price target of ₹315, following the company’s Q1FY26 earnings.
Nirmal Bang’s report highlights strong tailwinds in the Indian food delivery market, projecting it to grow at a CAGR of 17–22 percent between 2023 and 2028. The brokerage believes Swiggy and Eternal are well-positioned as market leaders to capture this expansion, supported by their large-scale operations, strategic investments, and consistent improvement in key financial metrics.
Swiggy: Margin Gains and Investment in Quick Commerce
The brokerage noted that Swiggy has significantly narrowed the food delivery margin gap with Eternal (Zomato). The gap, which stood at over 140 basis points in Q2FY24, reduced to around 81 basis points by Q4FY25. Swiggy’s revenue is projected to reach ₹8,850 crore by FY27, driven by an 18 percent CAGR in Gross Order Value (GOV) between FY25 and FY27.
In quick commerce, while Swiggy’s Instamart is still catching up, the company is investing aggressively to close the gap. It added 412 new dark stores in Q3 and Q4FY25, a move expected to boost throughput and push contribution margins into the positive zone by FY27. However, due to intense competition and higher subsidies, Instamart is valued at a 50 percent discount compared to Eternal’s Blinkit.
Nirmal Bang has valued Swiggy’s food delivery arm on par with Zomato, assigning it 42x EV/EBITDA on FY27 estimates, while Instamart is valued at 1x EV/GOV, compared to Blinkit’s 2x EV/GOV.
Despite the positives, the brokerage cautioned that rising competition and Swiggy’s aggressive expansion could delay profitability. Still, it expects Swiggy’s adjusted EBITDA as a percentage of GOV to exceed 1.5 percent by FY27, driven by growing ad revenues and operating leverage.
Eternal: Strong Leadership in Food Delivery and Quick Commerce
While Swiggy is working to close the margin gap, Eternal maintains a clear lead. In FY25, its GOV stood at ₹38,646 crore, 34 percent higher than Swiggy’s, supported by a robust three-year CAGR of 22 percent. Eternal reported an adjusted EBITDA of ₹1,505 crore, underscoring stronger monetization and cost controls.
In quick commerce, Blinkit is significantly ahead of Instamart, with double the GOV in FY25 and a higher average order value ( ₹667 vs. ₹514). Nirmal Bang expects Blinkit’s GOV to grow at a 72 percent CAGR over FY25–FY27, backed by volume expansion and deep market penetration.
Additionally, Blinkit’s scale and operational efficiency justify a valuation multiple twice that of Instamart, the brokerage said. Eternal’s continued investments in Hyperpure and the going-out segment were also factored into its valuation model, with fair values derived using EV/Sales and EV/GOV metrics on FY27 projections.
Stock Performance: Momentum Returns
Swiggy’s stock rose 7.8 percent to an intraday high of ₹426.35. It remains 31 percent below its 52-week high of ₹617, touched in December 2024, and above its 52-week low of ₹297, seen in May 2025.
The stock has gained 2 percent so far in July, following a 20 percent rally in June and a 5 percent gain in May. Before that, it had been in the red for four straight months, falling 4 percent in April, 1.3 percent in March, 19.5 percent in February, and 23 percent in January.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
