Kotak Institutional Equities, a prominent brokerage firm, has reaffirmed its ‘Buy’ rating on Eternal and Swiggy, while highlighting Blinkit’s strong positioning in the quick commerce sector. This development is significant as it reflects the evolving dynamics in India’s burgeoning food delivery and quick commerce markets, which are crucial for the country’s digital economy.
### Eternal and Swiggy: A Tale of Two Giants
Eternal is expected to outperform Swiggy in the upcoming June quarter, according to Kotak’s analysis. Eternal’s food delivery business is predicted to see an 18% year-on-year increase in net order value (NOV), reaching Rs 10,581 crore. However, despite the growth, Eternal’s margins could face pressure due to factors such as increased delivery payouts and rising fuel costs, especially during the monsoon season. Yet, the anticipated EBITDA margin stands at a respectable 5.2%.
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Swiggy, on the other hand, is projected to maintain steady growth. The company’s gross order value (GOV) is set to rise by 20% year-on-year to Rs 9,703 crore, with revenue expected to grow by 25% thanks to higher platform fees. Despite facing slower growth compared to Eternal, Swiggy remains a formidable player in the market.
### Quick Commerce: Blinkit’s Ascendancy
In the quick commerce space, Blinkit is showing remarkable progress, outpacing its competitor Instamart. Kotak forecasts an 88% increase in Blinkit’s NOV, soaring to Rs 17,277 crore. Blinkit is also expected to add approximately 225 dark stores, expanding its network to nearly 2,470 stores. This rapid growth is accompanied by an improvement in adjusted EBITDA, projected to rise to Rs 102 crore from Rs 37 crore in the previous quarter.
Instamart, while still growing, lags behind Blinkit with a 49% year-on-year growth in GOV and a 41% increase in NOV. The business is on track to achieve contribution margin breakeven, albeit with an adjusted EBITDA loss of Rs 730 crore, an improvement from the previous quarter’s Rs 858 crore loss.
### Implications for India’s Startup Ecosystem
The continued expansion and competition among these companies highlight the robust nature of India’s startup ecosystem, particularly in the food delivery and quick commerce sectors. The market is witnessing significant capital inflow and technological innovation, driven by changing consumer behaviors and the rise of digital infrastructure.
For investors, the reaffirmation of ‘Buy’ ratings on Eternal and Swiggy signals confidence in their long-term growth prospects. The competitive landscape also suggests that startups focusing on operational efficiency, customer experience, and technological integration are likely to thrive.
As the June quarter results are anticipated, stakeholders will closely monitor management commentary on competition, pricing strategies, and profitability improvements. These insights will provide valuable guidance for future investments and strategic decisions in India’s dynamic startup landscape.
