Motilal Oswal has turned more positive on India’s internet sector, highlighting improving prospects for Swiggy and Eternal (Zomato) as food delivery and quick commerce recover from recent headwinds. The brokerage upgraded Swiggy to buy with a target price of ₹560, implying a 32% upside, and reiterated its buy rating on Eternal with a target price of ₹420, indicating 29% upside.
The brokerage said the food delivery (FD) segment, which had been capped at 17–18% growth due to weak demand and cost pressures, is showing signs of recovery. Growth is now expected to accelerate beyond 20% over the next two to four quarters, supported by festive demand and favourable GST reforms. In the quick commerce (QC) segment, competitive pressures are easing as new entrants struggle to scale, the pace of dark store expansion slows, and leading players focus on cost-cutting, which has reduced discounting and customer acquisition costs. GST reforms are also expected to drive QC adoption in non-metro areas.
With these sectoral tailwinds, Motilal Oswal raised its growth estimates for both Zomato and Swiggy to 21–23% for FY26–27 and increased valuation multiples to 35 times FY27 estimated adjusted EBITDA from 27 times previously. Profitability timelines for Instamart and Blinkit have also been advanced, with expectations of earlier breakeven.
Motilal Oswal said the combination of accelerating growth, easing competition, and policy support provides a constructive outlook for the food delivery and quick commerce space. It believes both Swiggy and Eternal are well positioned to benefit from these shifts, making them attractive investment opportunities in the internet sector.
Disclaimer: The views and recommendations made in this article are those of Motilal Oswal. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
