Swiggy, Eternal Jump Up To 4% As Zepto's IPO Valuation Reset Eases Competition Fears

Shares of Swiggy and Eternal rallied on Tuesday after a report that Zepto is exploring an initial public offering (IPO) at a significantly lower valuation fuelled hopes that the intense price war in India's quick-commerce market could ease.

At market closing, Swiggy shares were up 4.07% at ₹268.47, while Eternal gained 4.23% to ₹308.35.

The rally followed a Moneycontrol report on July 27 stating that Zepto has begun discussions with investors around a post-money valuation of about $3 billion, sharply lower than the $5 billion valuation it had previously targeted.

Lower Valuation Signals A More Disciplined Market

Market participants believe the lower valuation, along with the possibility of a smaller fund raise, indicates that public market investors are becoming less willing to fund aggressive cash burn in exchange for rapid growth.

That could limit Zepto's ability to continue spending heavily on discounts, dark-store expansion and customer acquisition, reducing competitive pressure on listed rivals Swiggy and Eternal.

According to the report, Zepto's management has started discussions with investors around a pre-money valuation of about $2.5 billion and a post-money valuation of $3 billion, though the valuation and deal structure are yet to be finalised. The IPO could comprise a primary issue of around ₹5,000 crore along with a relatively small secondary component if the revised valuation is finalised.

Public Markets Rewarding Profitability

The latest discussions represent a sharp reset from earlier expectations.

Zepto had received the Securities and Exchange Board of India's approval for its IPO in April, when market estimates valued the company at around $7 billion. Later, existing investors, including Norges Bank and Motilal Oswal, were reportedly evaluating investments at a post-money valuation of about $5.1 billion.

Investors now believe public market shareholders are placing greater emphasis on sustainable growth and profitability rather than market share driven by heavy spending.

That shift is viewed as favourable for Swiggy and Eternal, both of which have already raised substantial capital and are under increasing pressure to improve profitability while maintaining growth.

Strong Balance Sheets Support Listed Rivals

Even as competition from Amazon and Flipkart continues to intensify in the quick-commerce segment, analysts note that both listed players have sufficient financial resources to compete if required.

At the end of the June quarter, Swiggy had around ₹10,800 crore in cash and short-term investments, while Eternal held nearly ₹16,000 crore in cash and liquid investments.

The improved sentiment has also been reflected in recent stock performance. Over the past two trading sessions, Swiggy has gained around 6%, while Eternal has advanced more than 9%, as investors reassess the competitive landscape ahead of Zepto's proposed public listing.