Removal Of 10-Minute Delivery Positive For Swiggy, Eternal, Says Elara Capital — Here's Why

Shares of quick commerce companies Eternal and Swiggy were in focus on Tuesday following news of the government directing these companies to halt the 10-minute guarantee on their platforms.

But given that the stock price of both Swiggy and Eternal wasn't impacted by the announcement, Elara Capital has come out with a note explaining the potential impact of the move.

The brokerage firm believes the removal of the 10-minute benchmark from quick-commerce apps is net neutral to positive for Swiggy and Eternal.

Elara Capital believes metro demand for quick-commerce has already been entrenched, thus ruling out any significant impact of the move.

Perhaps more importantly, the firm notes that the ten-minute delivery threshold was largely optics-driven rather than a fundmental business guarantee.

Actual delivery timelines shown on these apps were largely dynamic, quite unlike the 30-minute pizza delivery that was guaranteed by Domino's.

Therefore, Elara Capital believes the removal of the 10-minute benchmark won't be business-altering for either of the two counters. The firm further points out that the move won't impact volumes or growth either.

Eternal itself clarified late Tuesday that there is no change in the business model of quick commerce business Blinkit after reports earlier in the day said it removed the 10-minute delivery promise from its branding to comply with government directions.

This comes at a time when the quick-commerce space has been rocked by protests and concerns around workers' well-being and earnings, leading to widespread protests and media chatter.

As such, Union Labour Minister Mansukh Mandaviya met representatives of these platforms and told them to prioritise the safety of delivery partners instead of guaranteeing 10-minute deliveries.

Earlier this month, the Labour Ministry had proposed a 90-day annual work threshold as the mandatory eligibility criteria for gig and platform workers to access social security under new draft rules on the Social Security Code 2020, published on Dec 31.