Global brokerage house Nomura has turned bullish on India’s online food delivery space. It has initiated coverage on Swiggy with a ‘buy’ rating and hiked its target price for Zomato’s parent, Eternal.
The brokerage expects the duopoly of Swiggy and Zomato to remain the key cash generator in the sector, with both players benefiting from robust order growth, improving unit economics, and better Ebitda margins as scale expands.
Nomura set a target price of ₹550 for Swiggy, implying a 25 percent upside from Friday’s closing price. Eternal also received a ‘buy’ rating, with its target price raised to ₹370 from ₹300 earlier, indicating a potential upside of over 12 percent.
Food Delivery Driving Growth and Profitability
Nomura said the food delivery industry is moving toward a steady 15–20 percent annual growth rate, supported by rising penetration, higher usage frequency, and better unit economics. The brokerage highlighted that Eternal’s food delivery business is expected to clock a 16 percent gross order value (GOV) growth in FY26 and 21 percent in FY27. Contribution margins are seen improving from 8.6 percent in FY26 to 9 percent in FY27.
Swiggy’s constant product innovations are helping it gain ground against Zomato, with its market share likely to rise by 100 basis points in FY26. Nomura projects a 20 percent CAGR in GOV for Swiggy between FY25 and FY27. In the near term, Swiggy’s GOV is expected to grow 87 percent year-on-year, though contribution margins will gradually moderate. The brokerage added that Swiggy’s Instamart business is on track to turn contribution margin positive by Q2FY27.
Nomura also noted that Swiggy’s food delivery operations have emerged as a steady profit engine. While the quick commerce vertical is still in a challenger position, it is showing signs of improving profitability and could become an important growth driver over the medium term. The brokerage highlighted that Swiggy is well-capitalized to fund its expansion with limited equity dilution risk, though a macro slowdown could weigh on growth assumptions.
Blinkit Transitioning to Inventory-Led Model
In its note on Eternal, Nomura highlighted that Blinkit, the company’s quick commerce business, will transition to an inventory-led model over the next two-to-three quarters. This move is expected to support 100-basis-point margin expansion and raise working capital days to 18 from five currently. Nomura expects 80 percent of Blinkit’s GOV to shift to this model and raised its long-term contribution margin estimate by 60 basis points to 6.9 percent.
Blinkit is likely to achieve adjusted Ebitda break-even by Q4FY26, further strengthening Eternal’s overall profitability outlook. Nomura believes that as scale builds, the contribution margin and adjusted Ebitda of both Swiggy and Eternal will converge, creating a balanced and sustainable profit profile for the duopoly.
Swiggy and Zomato Stock Performances
Eternal jumped 21 percent in the last 1 year while added 26 percent in the last 3 months and 52 percent in the last 1 year.
Meanwhile, Swiggy added 20 percent in the last 3 months and 24 percent in the last 6 months.
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