Swiggy Is Focusing On Margins Leading To 200 Bps Market Share Erosion In QC: Experts | CNBC TV18

Added: 2026-05-12

[00:00:05]Welcome back. Uh let's dive into a special discussion that we've lined up for you and this is on quick commerce.

[00:00:10]And before we do that, let's uh you know look at both Swiggy and Eternal. Their numbers are out. Uh obviously we will soon have a third player in the market as well. For the quick commerce space, Swiggy's net order value for the last quarter was 5,700 crores. Compared that to Eternals Blinket which was 14,400 crores. Swiggy grew a lot slower than the industry and which explained why the stock was lower as well 60% versus 95%.

[00:00:33]In fact, over the last two years as well, Swiggy's Instamart has been growing at just around 54 55% whereas Eternal has been growing over 80% as well. Swiggy's orders half of Eternal and we have Quickcommerce margins as well at a negative 2.5% versus Eternal at around.3%. This is as a percentage of net order value. Adjusted EITA close to 858 crores in a loss for Swiggy as against a 370 crit profit for Eternal.

[00:00:59]Swiggy added just seven dark stores last quarter. Uh very small uh number as compared to Eternals. It's close to 22 243 on which they added about 200 stores and they have an equivalent amount of cash as compared to Eternal especially after the fund raise. A much uh lesser market cap. The street definitely believes that Swiggy is a lot slower on quick commerce and Swiggy by its own design also in the past has said that they are focusing on profitability which has meant that there has been a temporary order volume slowdown. They're confident of achieving break even. The street wants to know whether there is break even that's important or growth itself is important. Eternal on the other hand they've said that growth could come down to about 60% but that's largely on account of a high base more than anything else. They're more confident of getting to a 5 to 6% margins now than ever before. And high competition can have an impact on a certain period of time. And they aren't viewing profitability as the northstar.

[00:01:52]They are viewing execution as the northstar of which profitability will just be a byproduct. What is it that the brokerages are saying? Remember the market cap of Eternal is nearly three times more of uh uh Swiggy and they're saying that the gap in performance between Instamart and Blinket is getting increasingly apparent. uh Eternal's price to book value 6.3x is nearly two times higher than that of Swiggy's 4.6x.

[00:02:17]Eternal is valued at a high as a high growth profitable company with rerating which is already underway and analysts are ascribing negative to limited value to Instamart as compared to Blinket.

[00:02:28]Some saying that you know Swiggy is entirely valued by its food delivery business itself and nothing ascribed to quick commerce. consensus average target price for Swiggy 269 rupees and eternal at 330 odd rupees. The question is which horse leads this race. Uh to discuss this further we do have Gorav Malotra executive director Access Capital Led Pay who's the co-founder and CEO at Bizom joining in as well. Gorov coming to you first on both Swiggy as well as Eternal. You know the debate that always was there. Swiggy was offered as an attractive price to Eternal because of the discount that it traded. But now increasingly it's getting apparent why the discount in the first place and their own stance on focusing on profitability as against growth in Instamart. Compare that to eternal stance of focusing on growth with profitability just being a byproduct.

[00:03:20]How do you look at that?

[00:03:22]>> Yeah. Hi. Uh so see the way to think about is that you know in a fast growth industry like quickcommerce uh what you don't want to see is uh market share erosion uh because eventually you know in a platform business uh the one with the largest market share will typically have a larger pool of profit share also.

[00:03:43]This is like at at the at the end stage right. So if if a company's essentially seeding market share uh you know that becomes uh uh an issue uh because if the company would want to gain back some of the market share say 6 9 12 months later right as if once things settle down then to gain back that market share becomes even more expensive. So what Eternal and Blinket are doing is trying to sort of balance out growth and profitability. So it's not as if they're not competing. Uh they but they are being more tactical and targeted. Uh Swiggy for for now seems to be focusing a lot more on on margins. Uh and and that is sort of leading through some sort of a market share erosion. So we estimate that this quarter it lost roughly around 200 pips uh of of margin of market share uh in the in the quick commerce segment. M uh lal you know we speaking about both eternal and swiggy of course they are the listed players but the space in itself does not just belong to these two there are many other unlisted names as well with zeppto with flipkart Amazon Reliance everybody going into this quick commerce business even demart for they also have their own delivery business as well with the kind of competition that is there in this segment itself where what do you see as a future uh of this segment is there enough space for multiple players to survive or it's only going to come down to the fittest will survive uh analogy >> right so look so the way we look at uh retail as a whole uh we must understand that quickcommerce part forms less than 10% of India's retail as of right now more than 90% is still driven by mom and pop and then there is a narrative saying that kiranas or mom and pops are dying because of quick commerce which is not entirely true at least with our data that we see that more than two lakh odd kiranas or retailers got added in last year alone I'll bet the growth of kiranas is not necessary happening in a densely populated urban areas it's happening more in a rural or a semi-urban kind of areas so what we see is wherever there is a when you see in India overall as a retail there is more than 10% of growth in rural as a market alone and that is not driven by any of the quickcommerce players it is driven by consumers who are moving from uh so to say unpackaged food or goods to more packaged or more branded kind of a goods. The other thing to notice is how is this whole offline or kirana space reacting to this onslaught from quick commerce in general even in urban areas what we see is they are also trying to digitally adopt themselves. uh if you take an example or a parallel from something like mobility I mean if you see initially Uber Ola kind of made lot of large gains but today if you see that space is quite now democratized there are players like obviously something like Namayatri in Bangalore or Rapido all of these other players have come in so I think it's too early to so to say that if a quick commerce is a two horse three horse or a five horse race and I think whenever we look at technology uh we underestimate our Indian kiranas or Indian entrepreneurs ability to adapt themselves. Uh they did it when the whole modern trade onslaught happened when the big bazars and other guys were doing real well. Uh the kiranas evolved themselves to transform themselves into a standalone modern trade kind of a format. We see at least the shoots of that happening even in a even in the era of quick commerce or online commerce so to say. So as I said I think it is little bit early to kind of call uh quick commerce as a win or the current model of quick commerce as a win. I think there is a space for these kiranas to participate in this transition of consumers from offline to online commerce.

[00:07:44]>> Take that point uh Gorav and Lal thank you so much for joining in. We've uh kept it short this time but obviously this opens a lot of thoughts for us for a future conversation around the quick commerce space. As you both of you all pointed out, you know, it's not going anywhere in the very near future. So, conversations will continue. This is not just a discussion, but the first of many that will happen on the channel itself.

[00:08:06]What we'll do is take a short break, come back, focus on the markets. Down about 200 points for the front line index. Uh we'll focus on all of that in just a bit.