Whalesbook
### The Analyst-Market Disconnect
Bernstein's renewed 'Outperform' ratings for Swiggy and Eternal Ltd. underscore a positive view on their long-term prospects, citing strong fundamentals within the Indian e-commerce sector [Source A]. The brokerage assigned a price target of ₹500 to Swiggy, implying substantial upside from its Tuesday closing price of ₹314.40, and ₹370 for Eternal, which closed at ₹254.40 on the same day [Source A]. This analyst conviction contrasts sharply with the recent market performance of both companies. Swiggy shares have fallen for four consecutive trading days, while Eternal has seen a six-day losing streak. Year-to-date, Swiggy is down 20%, whereas Eternal has gained 13% in 2026 so far, though recent momentum has clearly shifted downwards for both [Source A]. As of February 25, 2026, Eternal Ltd. (ETEA) shares traded around ₹254.00 [32], and Swiggy's trading price information for the current day is not explicitly available but its Tuesday close was ₹314.40 [Source A].
### AI Integration: A Competitive Edge or Narrative Volatility?
Bernstein's report also touches upon the evolving role of Artificial Intelligence in the consumer journey, suggesting that AI-led platforms without substantial on-ground infrastructure are more likely to serve as incremental demand channels rather than pose a disintermediation risk to established players like Swiggy and Eternal [Source A]. Both companies are actively integrating AI. Swiggy has introduced its Model Context Protocol (MCP) allowing AI assistants to manage food orders, grocery shopping via Instamart, and dining reservations, effectively turning AI tools into shopping assistants [10, 11, 12, 13]. Instamart is reportedly the first quick-commerce platform globally to adopt MCP at scale [11, 12, 13]. Eternal Ltd. is deepening its strategic collaboration with OpenAI, embedding advanced AI across its platforms including Zomato and Blinkit, to enhance customer interactions and operational automation [7, 8, 9, 14]. This AI push aims to improve efficiency and customer experience, a trend mirrored across the Indian digital commerce space which is increasingly embracing AI-first strategies [7, 8].
### The Bear Case: Valuation, Competition, and Past Shadows
Despite a predominantly bullish analyst sentiment—with 30 out of 33 analysts covering Eternal recommending 'Buy', and 23 out of 28 for Swiggy—significant concerns loom. Eternal Ltd. is trading at historically high valuation multiples. Its Price-to-Earnings (P/E) ratio has been cited as high as 1076.41 [23] or 1120.63 [33], with expected forward P/E ratios also indicating a premium valuation, such as 673.06 for the current fiscal year [27]. MarketsMojo rates Eternal 'Sell,' citing risky valuation and declining operating profits despite recent price appreciation [28]. Furthermore, the company exhibits relatively low margins and has shown a poor Return on Equity (ROE) and Return on Capital Employed (ROCE) [15, 27]. Competitive intensity is a significant headwind, with rivals employing aggressive discounting tactics [18].
For Swiggy, while it's a private entity and lacks traditional market cap and P/E, its path to profitability remains challenging. The company reported a net loss of ₹2,350 crore for FY24, although it managed to reduce this loss by 44% year-on-year [34, 39]. Past allegations of mismanagement, inflated order volumes, and increased commissions have surfaced, and more recently, Swiggy disclosed an embezzlement of ₹33 crore by a former junior employee [21, 34, 39]. These factors, coupled with operational challenges like delivery partner issues and app inaccuracies, could contribute to investor caution [43].
### Competitive and Sectoral Context
Swiggy competes directly with Zomato (NSE: ZOMATO), which has also seen significant AI investment, notably its collaboration with OpenAI across its platforms [8, 9, 14]. Zomato's market capitalization stands around ₹2.45 trillion as of February 24, 2026 [32], with a reported TTM P/E ratio of 377.63 [19]. Zomato reported FY25 revenue of ₹21,320 crore and a PAT of ₹527 crore [29]. The broader Indian e-commerce sector is robust, projected to reach $159.25 billion in 2026, with the food and beverage segment, driven by quick commerce, expected to grow at a substantial 17.68% CAGR [35]. This growth is fueled by increasing digital penetration and demand from tier-II and tier-III cities [42, 45]. The e-commerce industry is expected to see a 9.9% salary increase in 2026, reflecting a healthy sector outlook [46].
### Future Outlook
Bernstein's 'Outperform' ratings and price targets suggest confidence in Swiggy and Eternal's ability to navigate competitive pressures and leverage technological advancements like AI. However, the market's recent price action indicates that investors are weighing these positive factors against Eternal's high valuation and Swiggy's profitability hurdles and past operational concerns. While analyst consensus remains strongly in favor of both companies, sustained stock price declines suggest underlying investor apprehension that requires further resolution before confidence is fully restored.