Swiggy, Eternal shares jump up to 5% as Zepto eyes lower IPO valuation

Shares of Swiggy and Eternal (the parent company of Zomato) rallied up to 5% on Tuesday despite a muted broader market, amid reports that rival quick-commerce platform Zepto is considering a lower valuation for its upcoming initial public offering (IPO).

The rally followed reports that Zepto is testing investors' appetite at a post-money IPO valuation of around $3 billion, significantly lower than the $5 billion valuation it had initially targeted. Notably, the proposed valuation is also well below the $7 billion valuation at which Zepto raised capital in its last funding round.

During the session, Eternal shares climbed as much as 4.78% to an intraday high of ₹309.90 on the BSE before closing at ₹307.65, up 4.02%, with a market capitalisation of ₹2.97 lakh crore.

In a similar trend, Swiggy shares surged as much as 5.4% to ₹272.95 in intraday trade. The stock eventually settled at ₹268.35, up 3.63%, valuing the company at around ₹74,073 crore.

According to market analysts, the market appears to be rewarding companies with clearer visibility on profitability.

The sharp reduction in Zepto's valuation has boosted sentiment around listed quick-commerce players, with investors betting that a lower IPO valuation could signal a moderation in the intense cash-burning competition that has defined the sector over the past few years.

Zepto's draft red herring prospectus (DRHP) proposes raising ₹8,010 crore through a fresh issue. Around 45% of the proceeds will be used to expand its dark-store network and fund lease rentals, 25% will be allocated to technology, cloud infrastructure, and marketing, while the remaining 30% has been earmarked for acquisitions and general corporate purposes.

According to Emkay Global, while Zepto has built a scaled pure-play quick-commerce business, it still faces a bigger challenge in improving profitability than Swiggy. The brokerage noted that Zepto follows an everyday low-price (EDLP) strategy with a low minimum order value, which has helped it rapidly scale its customer base but could make it harder to retain volumes as it raises order values to improve margins.

Emkay highlighted that Zepto has emerged as the second-largest quick-commerce player in India. Its FY26 net order value (NOV) was 13 percentage points higher than Swiggy Instamart's but 53 percentage points lower than Blinkit's. The company also recorded the industry's highest 2,117 orders per day per store in Q4 FY26, compared with 1,098 for Swiggy Instamart and 1,425 for Blinkit.

However, Zepto continues to post the highest adjusted EBITDA losses among its peers. In FY26, its adjusted EBITDA loss stood at ₹5,360 crore, compared with ₹3,510 crore for Swiggy and ₹280 crore for Blinkit. Emkay attributed this largely to Zepto's lower net average order value (NAOV) of ₹357, versus ₹491 for Swiggy and ₹530 for Blinkit.

The brokerage expects Zepto to eventually follow Swiggy's strategy of increasing average order values to narrow its losses, though this could come at the cost of order growth.

"Scale matters in quick commerce, but unit economics matter more," Emkay said. It noted that Blinkit improved its unit economics with around 400 dark stores, while Swiggy is doing so with nearly 1,200 stores. Zepto, with its lower order values and EDLP positioning, still has to make that transition.

Emkay has maintained a positive view on India's quick-commerce sector, citing strong structural demand and a long runway for growth in tier-II and tier-III cities. It reiterated its 'Buy' ratings on both Eternal and Swiggy, with unchanged target prices of ₹370 and ₹350, respectively.

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