Nomura notes that the inventory-led model is expected to aid margin expansion for quick commerce
Noting that profitability has improved steadily for both Zomato and Swiggy in the online food delivery space over the past few years, Nomura has stated that the industry is moving towards a 15 to 20 per cent steady state growth rate on-year and improving earnings before interest, tax, depreciation and amortisation (EBITDA) margins due to scale benefits, as per reports.
Citing healthy prospects for Eternal’s quick commerce arm, Nomura raised the target price of the company to Rs 370 per share. Nomura is expecting food delivery gross order value (GOV) growth to be around 16 per cent in FY26F and 21 per cent in FY27F with contribution margin (CM) of 8.6 per cent in FY26 and 9 per cent in FY27F.
The brokerage added that the online food delivery business in India is now a duopoly with improving unit economics and steady growth, driven by rising penetration and usage. The industry is on a steady profitability path and a key cash generator.
Swiggy’s product innovations continue to help the company improve its market share against Zomato. The brokerage noted that the contribution margin and adjusted EBITDA margin to converge for the two players in the longer term, as the scale builds.
Nomura added that the inventory-led model is expected to aid margin expansion for quick commerce. Blinkit has been aggressively expanding store numbers over the past few quarters. With over 1,000 stores added in the past five quarters and plans to add around 500 more by December-end, Blinkit would be at 2,000 store count, it added.
