BNP Paribas has identified substantial upside potential for shares of online food delivery and quick commerce platforms Eternal Ltd and Swiggy Ltd. In its latest analysis, the brokerage projects returns of up to 48% for Eternal and 39% for Swiggy, even as it has adjusted target multiples downwards and trimmed earnings estimates to account for heightened macroeconomic risks.
The report notes that rising losses within the quick commerce (QC) segment and intensifying competitive pressures have impacted the stock performance of both Eternal and Swiggy. Despite these challenges, BNP Paribas maintains a positive long-term outlook, citing several strategic levers for improving profitability.
Key Profitability Levers Identified
Analysts point to several factors that could enhance the financial performance of these platforms. These include improved dark store utilization as daily order volumes increase, leading to better negotiation power with brands. Additionally, higher advertisement revenues, an increase in average order value as product assortments expand, and operating leverage benefits are expected to contribute positively to profitability.
Competitive Landscape and Market Dynamics
The quick commerce market in India is characterized by fierce competition, with a diverse array of players vying for market share. Beyond Eternal and Swiggy, the landscape includes e-commerce giants such as Flipkart and Amazon, omnichannel retailers like Reliance and Avenue Supermarts Ltd, and other quick commerce specialists such as Zepto. BNP Paribas describes the current phase as a “land-grab,” where companies are actively expanding their store networks, diversifying product offerings, and using discounts to secure a larger customer base.
The brokerage emphasizes that urban consumers are increasingly turning to QC platforms for their initial purchase impulses, transforming convenience into a habitual behavior. This shift underpins the significant revenue opportunity ahead for the industry.
Target Prices and Brokerage Preference
BNP Paribas has revised its target price for Eternal to Rs 380, down from Rs 420 previously. Based on Eternal’s recent closing price of Rs 257.35, this new target suggests a potential upside of 48%. For Swiggy, the target has been adjusted to Rs 400 from Rs 490, indicating a 39% upside from its prevailing price of Rs 287.30. Despite the strong upside potential for both, BNP Paribas explicitly states a preference for Eternal.
"We have lowered our target multiples to reflect peer valuations and trimmed earnings estimates to factor in the increased macro risk but continue to see strong upsides in both the names. We prefer Eternal," the BNP Paribas report stated.
Evolving Quick Commerce Ecosystem
The quick commerce sector is rapidly expanding beyond its initial focus on grocery delivery. Platforms are now transforming into broader instant retail hubs, integrating diverse discretionary and service categories. These new offerings include electronics accessories, beauty and cosmetics, fashion basics, toys, pet care, and gifting items. By pushing these higher-margin products, companies aim to significantly improve their unit economics and overall profitability, despite the ongoing challenge that many e-commerce firms in India are not yet profitable.