Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal Financial Services, has reiterated a positive view on Eternal while remaining cautious on Swiggy, saying the gap between Blinkit and Instamart is continuing to widen.
Khemka expects Eternal to continue benefiting from stronger execution, improving unit economics and store expansion, making it the brokerage’s preferred play in the quick commerce space. In contrast, Swiggy needs to improve execution and reduce losses before investor sentiment can turn positive.
He said the divergence between the two companies has become more visible after their latest results, with Eternal continuing to outperform across key operating metrics.
“One thing that clearly stands out… is the execution capabilities,” Khemka said. “Eternal continues to execute and deliver quarter after quarter, while Swiggy has been witnessing a lot of lag in terms of growth and execution.”
According to Khemka, Blinkit is outperforming Instamart across multiple parameters, including growth, store productivity and profitability.
“The divergence between Blinkit and Instamart is widening, making Eternal a stronger investment proposition despite its higher valuation,” he said.
Motilal Oswal has a ‘Buy’ rating on Eternal with a target price of ₹420. Khemka said Blinkit’s market leadership, improving unit economics and aggressive store expansion are expected to drive incremental value creation over the coming quarters.
However, the brokerage remains cautious on Swiggy. Khemka said losses in the quick commerce business have increased, while the management has not provided enough confidence that profitability will improve in the near term.
He added that Motilal Oswal’s discounted cash flow (DCF) valuation assigns a negative value to Swiggy’s quick commerce business, with most of the company’s valuation currently coming from food delivery.
“If one business, which was supposed to grow, continues to bleed, and the other business, which is now becoming a cash cow, is also losing market share, it will put a lot of pressure on business growth,” he said.
Summing up his view, Khemka said, “Until we see execution improving, the gap with Blinkit would only continue to rise.” He added that the brokerage would ‘avoid Swiggy’ while continuing to remain positive on Eternal.
For the full interview, watch the accompanying video
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