Eternal Shares Surge 8% in 2 Days; Here's What’s Fueling the Rally

Eternal shares witnessed another robust surge on Thursday as investor sentiment remained optimistic. The shares of the food delivery platform soared over 5% during Thursday's trading session. While rival Swiggy received an 'Overweight' rating, Morgan Stanley's recent report reaffirmed Zomato as its top pick.

At 12:30 pm, Eternal (Zomato) shares were trading at ₹258.90 price level, up by more than 5.46% on the National Stock Exchange.

In the last 5 trading sessions, the shares of the company have witnessed a double-digit climb of 13% on the bourses.

Morgon Stanley, in its recent market note, stated that Swiggy is about two years behind Eternal in terms of food delivery profit margins. The brokerage firm expects Swiggy to earn ₹5 less per order than Eternal, mainly owing to "differences in cost structure (both at and below the contribution margin level)."

"Given that food delivery is a matured business and already profitable, we apply an EV/adjusted Ebitda multiple to our F28e estimates. We use F28e adj. Ebitda given that Swiggy lags Zomato by 2 years in its journey, per our assessment, in terms of gross order value (GOV) and adjusted Ebitda numbers," Morgon Stanley said. So far this year, Eternal shares have surged over 22% on the National Stock Exchange. Swiggy, on the other hand, witnessed a double-digit decline of 31% during the same period.

Swiggy Share Price Outlook

Swiggy shares have struggled to remain in the green territory since its debut on the D-street. The shares have plummeted over 14% since its listing price. However, Morgon Stanley is expecting the current trends to improve going ahead.

"We expect current market share trends to sustain and the food delivery business to grow at a 15.8% CAGR (F25-28). In Q-commerce, we believe overall TAM growth could surprise positively, and, with aggressive investment in infrastructure, Swiggy should be able to regain some market share and grow gross order value at a 63% CAGR, F25-28, per our analysis," the brokerage firm said in its recent report.