Shares of food delivery giants Eternal and Swiggy surged as Citi raised target prices for both companies, citing strong growth prospects in the quick-commerce sector.

Stock Performance

Citi's Revised Target Prices

Growth Projections for Eternal

• Blinkit Quick-Commerce GOV Growth:
  • FY26: 123%
  • FY27: 57%
• Adjusted EBITDA: Expected to break even in Q3 FY26

Swiggy's Performance Highlights

• Food Delivery GOV: Up 19% year-on-year
• Quick-Commerce GOV: Surged 106% year-on-year
• Overall Revenue: Increased 64% year-on-year
• Adjusted EBITDA Losses: Narrowed to 2760.00 crore

Citi's bullish stance on both Eternal and Swiggy stems from the robust growth observed in their quick-commerce segments. For Eternal, the brokerage has maintained a 'buy' rating while significantly increasing its target price from 320.00 to 395.00. This optimism is primarily driven by the strong growth momentum of Blinkit, Eternal's quick-commerce arm.

Eternal's shares responded positively to the news, climbing 1.70% to hit a 52-week high of 347.50. The brokerage expects Eternal's quick-commerce gross order value (GOV) to grow by an impressive 123% in FY26 and 57% in FY27. Additionally, Citi anticipates Eternal's adjusted EBITDA margin to break even in the third quarter of FY26, marking a significant milestone for the company's profitability.

Swiggy, not to be outdone, saw its shares jump nearly 4.00% to 435.95 following Citi's revised target price of 495.00, up from the previous 465.00. The company's performance has been noteworthy, with its food delivery GOV increasing by 19% year-on-year. However, it's the quick-commerce segment that has truly shone, with GOV surging by 106% compared to the previous year.

Swiggy's overall revenue growth of 64% year-on-year further underscores its strong market position. The company has also made strides in improving its profitability, with adjusted EBITDA losses narrowing to 2760.00 crore. Citi's analysis suggests that Swiggy's quick-commerce unit is on the brink of breaking even, potentially achieving this milestone within the next one to three quarters.

The positive outlook for both Eternal and Swiggy reflects the growing importance of the quick-commerce sector in the food delivery industry. As consumer preferences continue to evolve towards faster and more convenient delivery options, companies that can effectively capitalize on this trend are likely to see sustained growth and improved financial performance.

Investors and market watchers will be keen to observe how these projections play out in the coming quarters, particularly in light of the competitive landscape and evolving market dynamics in the food delivery and quick-commerce sectors.

Eternal has been the subject of a significant block deal, with Goldman Sachs selling over 1 crore shares for Rs 355.32 crore to BofA Securities at Rs 329 per share. The transaction price matched Wednesday's closing price for Eternal shares.

Market Performance

Eternal shares closed at Rs 328.20, experiencing a marginal decline of 0.24%. Despite this slight dip, the stock has shown robust performance over the past year:

• All-time high: Rs 343.90 (reached on September 22)
• One-year returns: 20%
• Outperformance: Surpassed Nifty and BSE Sensex, which posted negative 3% returns

Analyst Outlook

HSBC has expressed confidence in Eternal's prospects, raising its target price to Rs 390 from Rs 340 while maintaining a 'Buy' rating.

Market Capitalization

Eternal's market capitalization stands at an impressive Rs 3.16 lakh crore, surpassing established players like Tata Motors and Titan.

Financial Performance

The company's recent quarterly results revealed a mixed picture:

The significant drop in net profit was attributed to investments in quick commerce and going-out segments, indicating the company's focus on future growth areas.

Quick Commerce Performance

Eternal's quick commerce segment, Blinkit, demonstrated strong growth:

• Net order value: +125% year-on-year
• Outpaced competitor: Surpassed Swiggy's Instamart, which grew at 75%

This block deal and the company's financial results highlight Eternal's dynamic position in the market. While the profit decline might raise concerns, the substantial revenue growth and strategic investments in high-growth segments suggest the company is positioning itself for long-term expansion in the competitive quick commerce space.