Food Delivery Face-Off: HSBC Picks Eternal As The Market Leader Over Swiggy

As India’s food delivery and quick commerce industries surge ahead in 2025, some of the biggest players continue to battle for market dominance. Two giants, Eternal Ltd (parent company of Zomato and Blinkit) and Swiggy Ltd, have been closely watched by investors and market strategists as competition intensifies, with HSBC offering a unique perspective on their trajectories. This detailed newsletter explores HSBC’s stance, operational performances, financial health, and future outlooks of both companies in an evolving sector.

HSBC’s Clear Preference

HSBC reiterates a strong “Buy” rating on Eternal, raising the target price from Rs 340 to Rs 390, reflecting confidence in its scale, profitability leadership, and robust cash reserves.

Swiggy receives a “Hold” rating with a price target of Rs 430, tempered by concerns over slower margin progress and continued execution risks.

HSBC highlights Eternal’s commanding position in both food delivery and quick commerce, powered by Blinkit’s 125% year-on-year surge in net order value (Q1 FY26), far surpassing Swiggy’s Instamart at 75% growth.

Blinkit maintains a significant margin advantage (3% contribution margin) over Instamart’s negative 4.6% margin.

The brokerage points to Blinkit's superior operational leverage with about 1544 dark stores versus Instamart’s 1062.

Swiggy’s higher marketing and customer acquisition costs weigh on margins and dampen upside potential in the short term.

Cash reserves further distinguish the two: Eternal boasts an estimated $2.2 billion, while Swiggy’s cash shrunk to about $620 million recently.

HSBC forecasts Instamart may only break even at EBITDA level by FY31, whereas Blinkit is projected to reach profitability much sooner.

Operational And Financial Review

Eternal’s food delivery business commands a higher forward EV/EBITDA multiple at 45x against Swiggy’s 40x, reflecting growth confidence.

For quick commerce, Blinkit’s projected FY30 earnings significantly outpace Instamart’s, with multiples also favoring Eternal.

Both companies registered strong gross order value (GOV) growth, but Eternal’s scale and margin visibility offer a competitive edge.

Eternal reported a 55% YoY rise in B2C net order value and a 70% jump in consolidated revenue, signaling robust expansion.

Swiggy’s revenue growth and gross order value gain solid traction but profitability challenges persist.

Strategic Implications And Market Positioning

Eternal’s inventory ownership model and aggressive dark store expansion position it favorably to consolidate market leadership.

Swiggy’s focus on unit economics and selective store additions demonstrates a shift towards sustainable growth.

HSBC acknowledges that Swiggy’s valuation discount reflects execution risk, requiring rapid margin improvement and cash burn mitigation to regain investor confidence.

Multiple brokerage firms have echoed HSBC’s cautious optimism, balancing Swiggy’s potential with operational hurdles.

Eternal’s consistent execution and robust balance sheet provide resilience amid competitive pressures.

Industry Outlook And Future Prospects

The intense competition in quick commerce and food delivery is set to continue, placing innovation, customer experience, and profitability at center stage.

Both companies are investing heavily to cater to evolving consumer demands and expand into untapped markets.

The trajectory of losses and path to profitability remain critical factors guiding stock valuations.

Market watchers remain keyed into future earnings reports and management guidance for signs of a turnaround or growing dominance.

Conclusion: HSBC Picks Eternal As The Safer Bet For Investors

In the battle of Eternal versus Swiggy, HSBC’s latest analysis clearly favors Eternal as the better buy and long-term winner. Its scale leadership, far superior margin outlook, and strong cash buffer equip it best to weather fierce competition and unlock sustainable growth in India’s dynamic food and quick commerce ecosystem. Meanwhile, Swiggy’s story hinges on swift execution improvements and narrowing losses to attract renewed market enthusiasm.

Sources: Economic Times, CNBC TV18, Upstox, Motilal Oswal, Jefferies Reports, HSBC Research, Investing.com