Swiggy, Eternal Surge As Zepto's IPO Valuation Reset Raises Market Share Hopes

Shares of Swiggy and Eternal are heading for their strongest monthly gains in years as investors bet that Zepto's sharp IPO valuation reset and funding constraints could weaken its ability to aggressively expand, opening the door for listed rivals to gain market share in India's fast-growing quick commerce segment.

Swiggy shares have climbed nearly 24% in July, putting the stock on track for its best monthly performance since listing in November 2024. Eternal has gained around 17%, marking its strongest monthly advance in more than two years.

The rally follows growing concerns over Zepto's proposed initial public offering, which has reportedly faced resistance from institutional investors over its high cash burn and valuation expectations.

According to reports, leading domestic mutual funds have pushed back against Zepto's proposed valuation, while several institutional investors have indicated a significantly lower valuation than the company's last private funding round.

The valuation currently under discussion is estimated at $2.5-3 billion, sharply below the $7 billion valuation at which Zepto raised $450 million in October 2025 in a funding round led by CalPERS. It is also below the $3.5-4 billion range that had previously been discussed.

According to ET Tech, Zepto is still negotiating the IPO pricing and could defer the public issue over the next few weeks if the gap between its valuation expectations and investor demand remains unresolved.

The company has not withdrawn its IPO plans. However, with the validity of its draft red herring prospectus expiring on August 21, it has limited time to decide whether to accept a lower valuation, reduce the issue size or postpone the listing.

Funding Pressure Could Benefit Rivals

Analysts believe tighter funding conditions could force Zepto to moderate its aggressive expansion strategy.

"Zepto will have to focus on lowering the cash burn now, typically resulting in lower growth and market share loss to incumbents," Zepto investor and Asmore CIO Rashi Talwar Bhatia told Bloomberg.

Bhatia added that a cash-constrained Zepto could particularly benefit Swiggy, as the second-largest player in the market typically stands to gain the most if a key rival slows expansion.

Zepto competes with Swiggy Instamart, Eternal's Blinkit, Amazon India and Tata Group's BigBasket in the quick commerce segment.

Brokerages See Continued Investment By Swiggy

Brokerage Nomura said Swiggy is likely to continue investing aggressively in its quick commerce business despite near-term losses.

Following the company's June-quarter earnings, the brokerage said Instamart intends to prioritise growth over margins and expects cash losses in the quick commerce business to continue until at least FY28.

However, Nomura noted that Swiggy's food delivery business generates sufficient cash flows to support those investments.

The differing funding positions have led investors to bet that while Zepto may have to curb spending to conserve cash, Swiggy and Eternal could continue investing aggressively, potentially strengthening their market positions in one of India's fastest-growing consumer segments.