JM Financial anticipates a widening performance gap in India's quick commerce sector, with Eternal-owned Blinkit poised to significantly outperform Swiggy's Instamart in the first quarter (Q1). The brokerage firm has reiterated Eternal as its top stock pick, projecting a substantial 70% upside potential.
Blinkit's Strong Growth and Profitability Outlook
According to JM Financial's Q1 preview, Blinkit is expected to report robust growth, with its net order value (NOV) potentially increasing by approximately 18% quarter-on-quarter (QoQ). This acceleration, up from about 8% growth in Q4 FY26, is attributed to seasonal demand and a continued expansion of its dark store network. Furthermore, Blinkit is projected to achieve an adjusted EBITDA profit of Rs 125 crore in Q1, a significant jump from Rs 37 crore in the previous quarter, indicating a strong positive trajectory.
Instamart Faces Muted Growth and Persistent Losses
In contrast, Swiggy's Instamart is forecast to experience more subdued growth. JM Financial expects Instamart's NOV to rise by around 5% QoQ in Q1, a modest increase from 4% in Q4 FY26, despite benefiting from similar seasonal tailwinds. While Swiggy is focusing on improving contribution margins by rationalizing loss-making orders, which may help Instamart turn contribution margin positive in Q1, its adjusted EBITDA loss is still expected to remain high at approximately Rs 760 crore, down slightly from Rs 860 crore in Q4.
Revised Valuations and Analyst Outlook
JM Financial has revised its target prices for both Eternal and Swiggy. For Eternal Ltd., the target price has been raised to Rs 440 from Rs 400, primarily due to a roll-forward to June 2027. The brokerage maintains its "Buy" rating on Eternal, citing its strong growth prospects and increasing profitability in the quick commerce segment.
For Swiggy Ltd., JM Financial continues to assign no value to Instamart and other loss-making ventures, excluding cash from its valuation due to ongoing high cash burn. The brokerage lowered its valuation for Swiggy's food delivery business and revised its June 2027 target to Rs 250 from Rs 280. A "Reduce" rating is maintained on Swiggy, with analysts expressing skepticism about a meaningful turnaround for Instamart under its current strategy.
The trade-off between profitability and growth will be a critical factor to observe for Instamart, while Blinkit's accelerating QoQ growth could provide a positive surprise to the market. In the broader food delivery sector, JM Financial anticipates approximately 19% year-on-year (YoY) gross order value (GOV) and NOV growth for both Swiggy and Zomato, though Swiggy's adjusted EBITDA margin is expected to dip due to higher delivery costs and annual wage revisions.