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Analysts expect the overall impact on both companies to be negligible, noting that the stocks remain attractive ahead of the festive season
Swiggy & Zomato (Representational Image)
The latest GST changes, which mandate Swiggy and Eternal to pay 18% GST on delivery charges collected from customers, are unlikely to materially affect the food delivery and quick commerce sector, according to experts. They believe that stronger consumption trends—driven by GST rate cuts on consumer goods and the rapid adoption of quick commerce—will offset the additional tax burden.
Analysts expect the overall impact on both companies to be negligible, noting that the stocks remain attractive ahead of the festive season, when consumption is set to rise. Under the new regime, the government has clarified that delivery fees charged to customers are taxable, and platforms like Swiggy and Zomato will be liable to pay. Earlier, GST was not consistently levied on every order as platforms were not directly liable. Reports suggest that the companies will now pass on the 18% GST cost fully to customers.
Motilal Oswal bullish on Swiggy, Eternal
Brokerage house Motilal Oswal Financial Services has upgraded Swiggy to a ‘buy’ with a target price of ₹560, implying a 32% upside, citing an inflection in food delivery growth and improved quick commerce economics. It has also reaffirmed a ‘buy’ rating on Eternal with a target price of ₹420, indicating a 29% upside, highlighting structural growth drivers and earnings potential.
The brokerage expects food delivery growth, which had slowed to 17–18% amid weak consumption and macroeconomic pressures, to accelerate beyond 20% over the next two to four quarters, supported by festive demand and GST reforms.
In quick commerce, profitability has been pressured by heightened competition, rapid dark store rollouts, and high customer acquisition costs. However, Motilal Oswal sees the cycle turning. It pointed out that new entrants have struggled to gain share, dark store expansion is moderating after peaking in Q4FY25, leading players are focused on cutting costs and reducing discounting, and GST reforms could boost adoption in non-metro cities.
The brokerage has raised its food delivery growth estimates for both Swiggy and Eternal to 21–23% for FY26–FY27, up from 19–20% earlier. It now values food delivery businesses at 35x FY27E adjusted EBITDA, compared with 27x previously. Profitability assumptions for Instamart and Blinkit have also been revised upward, resulting in upgraded target prices for both Swiggy and Eternal.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
September 05, 2025, 11:40 IST
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