1. THE SEAMLESS LINK
The recent market surge for both Eternal and Swiggy, driven by technical rebounds and sector optimism, masks a fundamental split in their financial trajectories. While early February has seen both platforms capture investor attention, the underlying performance metrics reveal a widening gap, particularly concerning profitability, which will be a key determinant of their long-term viability.
2. THE STRUCTURE
The Core Catalyst: Earnings Divergence
Eternal, formerly Zomato, has demonstrated robust financial improvement in its Q3FY26 results, with net profit climbing 73% year-on-year to ₹102 crore. This was propelled by an extraordinary 202% revenue growth to ₹16,315 crore, signaling strong operational scale and enhanced profitability in its core food delivery and quick commerce segments. The company's efforts in achieving profitability for its Blinkit quick commerce arm and maintaining a strong EBITDA margin in food delivery appear to be paying dividends.
Conversely, Swiggy's Q3FY26 performance painted a more challenging picture. Despite a healthy 54% revenue increase to ₹6,148 crore, the company's net loss expanded to ₹1,065 crore, an increase from ₹799 crore in the prior year's quarter [cite:Scraped News]. This widening loss, even with revenue growth, indicates persistent cost pressures or aggressive investment in expansion, which has led to an overall negative return on equity.
On Friday, February 13, 2026, despite these divergent results, market sentiment led to minor declines for both: Eternal slipped 3.6% to ₹287, while Swiggy was down 1.5% at ₹333, mirroring a broader market pullback of around 1% for the Nifty 50 [cite:Scraped News].
The Analytical Deep Dive
The food delivery sector in India is poised for significant growth, projected to expand from approximately $9 billion in FY25 to $25 billion by FY30. Eternal holds a commanding lead in food delivery with a 58% market share and also leads in quick commerce via Blinkit with a 40-45% share. Swiggy commands a 42-45% share in food delivery and approximately 20-25% in quick commerce.
Valuation multiples for Eternal are volatile and exceptionally high, with a P/E ratio reported around 93.3, or significantly higher at over 1,200 in other metrics, and a P/S ratio of approximately 6.70x as of February 2026. This suggests that investor expectations for future growth are already priced in, with limited room for error. Swiggy, being a private entity, had an IPO valuation target of $11.3 billion in late 2024, with a P/S ratio around 6, indicating a comparatively more grounded valuation relative to its sales.
Analyst sentiment remains largely positive. BNP Paribas India has a target of ₹420 for Eternal, and Motilal Oswal sees potential up to ₹440 for Swiggy [cite:Scraped News]. However, previous reactions to earnings have shown market sensitivity; Zomato's stock fell nearly 9% after its Q3 FY26 results due to leadership transition uncertainty and intense competition, despite strong operational performance. A similar past event saw Zomato's profit decline 57% YoY in Q3 FY25, causing its stock to drop over 13%.
The broader market has experienced significant volatility in early February 2026, influenced by global trade deals and budget announcements, leading to swings in the Nifty 50 and increased India VIX readings. This environment underscores the importance of fundamental strength over short-term technical movements.
⚠️ THE FORENSIC BEAR CASE
Swiggy's persistent widening of losses, even with substantial revenue growth, presents a significant bear case. Operating with a negative EBITDA margin and a deeply negative ROE of -255.36% as of FY24, the company's path to sustainable profitability remains uncertain. While it invests aggressively in quick commerce and new services, these are framed as 'strategic bets', but they continue to drain capital. The company's operational losses have doubled in the past, signalling that efficiency gains are not outstripping cost increases.
Eternal, despite its profitability, faces its own set of risks. Its extremely high P/E ratio suggests significant investor optimism that may not be sustainable if growth falters or if competition intensifies further. Past performance metrics like a low ROE of 7.13% and a negative five-year EBITDA margin of -11.47% for its quick commerce segment raise concerns about the long-term margin potential of its diverse verticals. The recent leadership transition, with the founder stepping down as Group CEO, introduces near-term uncertainty. Furthermore, the impending entry of Flipkart into the food delivery market poses a substantial competitive threat, potentially altering pricing dynamics and customer offers across the industry. Uber Eats, Ola's ventures, and Amazon's past attempts have all failed in this highly capital-intensive sector.
3. THE FUTURE OUTLOOK
Analyst targets remain optimistic for both companies, with projections for Eternal reaching up to ₹420 and Swiggy up to ₹440. Brokerages like Motilal Oswal have reiterated 'Buy' ratings, citing valuation comfort for Swiggy and upside potential for Eternal, despite ongoing competitive intensity. However, the market will closely scrutinize the companies' ability to translate revenue growth into sustainable profits, manage operational costs, and navigate an increasingly competitive landscape. Zomato's future share price targets for 2026 range from ₹345-₹370, with some analysts predicting prices as high as ₹470.79 by year-end. Swiggy's valuation, while still high, has seen adjustments, and its IPO plans remain a significant future event.