Why Are Investors Worried?
Shares of Zomato (now Eternal) and Swiggy took a hit after Bank of America (BofA) downgraded both companies. The reason? Rising competition and shrinking profits in India’s quick commerce (QC) sector. Eternal’s stock fell 2.6%, while Swiggy dropped 1.5% following the report.
BofA slashed its rating for Eternal from “buy” to “neutral” and gave Swiggy a harsh double downgrade—from “buy” to “underperform.” The brokerage warned that quick commerce, once seen as a high-growth sector, is now struggling with rising losses and cutthroat competition.
The report predicts higher losses over the next 12-15 months due to aggressive discounts and price wars. Additionally, profit margins are expanding at a slower pace, putting more pressure on both companies.
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Stock Performance: A Rough 2025
So far this year:
- Eternal’s shares have plunged 26.5%
- Swiggy’s stock has crashed 38%
Meanwhile, India’s Nifty 50 index has inched up by 0.15%, making the drop even more concerning.
Despite the slump, Eternal will enter the Nifty 50 index after market close on March 27, 2025. This could bring in passive fund inflows, offering some relief.
What’s Next for Quick Commerce?
With competition heating up, the big question is: Can Zomato and Swiggy turn things around? Investors will be watching closely to see if these giants can balance growth with profitability.
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