Analysts expect a mixed set of earnings from India's new-age technology companies in the March quarter, as rising macroeconomic uncertainty, competitive intensity and continued investment in quick commerce weigh on profitability even as revenue growth remains strong. Brokerages remain constructive on long-term growth, but near-term margins continue to be closely monitored.
Brokerages on Eternal
According to Kotak Institutional Equities, Eternal is expected to report healthy growth in Q4, driven by strong performance in both food delivery and quick commerce arm Blinkit.
The brokerage expects food delivery net order value (NOV) to grow 17% year-on-year, while Blinkit NOV is projected to surge 99% year-on-year, supported by aggressive store additions and improving throughput at existing stores. Sequentially, food delivery NOV may decline 2.4% due to seasonality, while Blinkit NOV could rise around 10% quarter-on-quarter.
Margins are also expected to improve slightly. Food delivery Ebitda margin is estimated at around 5.7% of NOV, up 30 basis points quarter-on-quarter, driven by higher platform fees, improved restaurant take rates and increased advertising income. Contribution margin is expected to rise to 10.7% of NOV.
For Blinkit, profitability may remain flat sequentially as operating leverage from older stores is offset by pricing actions amid rising competition. However, Kotak believes Blinkit remains best positioned among quick commerce players due to improving ad monetisation and a higher proportion of mature stores over time.
Meanwhile, HDFC Securities expects Eternal's NOV growth to be supported by dark store expansion and stable order growth. The brokerage expects adjusted Ebitda margins of around 5.6% of NOV, broadly stable quarter-on-quarter. It also noted that the food delivery growth gap between Eternal and Swiggy may narrow in quarter ended March due to user additions driven by membership programmes.
Nuvama Institutional Equities expects Eternal's food delivery NOV to grow about 18% year-on-year, with Blinkit continuing to drive overall growth. Margin improvement is expected to remain gradual, with profitability improving as scale increases.
Brokerages on Swiggy
Brokerages expect Swiggy to report steady revenue growth in quarter ended March, led by food delivery and Instamart, though profitability in quick commerce is likely to remain under pressure.
Kotak Institutional Equities expects Swiggy's food delivery gross order value (GOV) to grow 19% year-on-year, with revenue growth of about 23% driven by higher take rates and platform fee hikes. Contribution margin is expected to improve by 20 basis points quarter-on-quarter to around 7.8%, while adjusted Ebitda margin may improve to 3.2%.
Instamart is expected to report strong growth, with GOV rising 75% year-on-year and revenue growing 66% year-on-year. However, losses are likely to remain high due to competitive intensity and continued investments, with adjusted Ebitda loss estimated at around Rs 8.7 billion, only slightly lower than the previous quarter.
HDFC Securities noted that the fourth quarter remained largely unaffected by macro headwinds such as LPG shortages, though both Swiggy and Eternal increased platform fees by 17–19% to protect margins. The brokerage expects Swiggy's order growth and GOV to decline sequentially due to seasonality, but margins may improve due to better take rates.
Nuvama also expects Swiggy's food delivery GOV to grow over 21% year-on-year, with Ebitda margins improving slightly. However, Instamart profitability is expected to improve only gradually, with high competition and continued cash burn likely to weigh on near-term earnings.
Swiggy Vs Eternal Stock Performance
Swiggy shares closed 1.29% lower at Rs 271.80 apiece on Monday. This compares to a 1.12% advance in the NSE Nifty 50 Index. During the day, the stock fell as much as 3.4% to Rs 266 per share.
It has fallen 15.51% in the last 12 months and 30.43% year-to-date. However, in the quarter ended March Swiggy shares fell 33.44%.
However the shares of Eternal have performed better in comparison to Swiggy.
Eternal shares closed 0.21% higher at Rs 232.20 apiece on Monday. During the day, the stock fell as much as 1.6% to Rs 228.02 per share. It has risen 10.29% in the last 12 months and fallen 18.18% year-to-date. However, in the quarter ended March Eternal shares fell 19.32%.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
