Despite these developments, analysts note that this phase is different from the previous cycle of land grabbing. Dark store additions are likely to be much lower, with new launches estimated to decline by nearly 90 percent compared to last year’s aggressive buildout. Most newly opened stores have already passed the four- to six-month breakeven stage, paving the way for incremental throughput and margin improvement. For major platforms, throughput – measured as daily orders per store – is expected to increase by approximately 30 percent over the next four quarters, providing an important cushion against rising promotional costs.The FD market continues to consolidate as a stable duopoly, with gross order value (GOV) growth expected to remain robust at 20-22 percent per annum in FY26-27. High customer satisfaction and consistent offtake rates support a healthy medium-term outlook for the segment, supported by operating leverage and stable consumer demand.
QC, on the other hand, remains a more volatile but fast-growing category. The sector design is similar to the previous cycle, but with lower combustion intensity and faster normalization of contribution margins. Efficiency improvements – from better use of dark stores to higher average order values – are expected to accelerate the return to profitability.
Overall, the sector’s structural fundamentals appear intact, although renewed discounting may temporarily put pressure on margins. With a more disciplined expansion strategy, rising throughput and strong consumer acceptance, the food delivery and express commerce markets are positioned for sustainable growth over the medium term, even as competition rebounds.
Forever – Target Price: Rs 410
Eternal is witnessing strong momentum as it shifts to an inventory-driven model, delivering a sharp increase in net sales of 90 percent quarter-on-quarter and 183 percent year-on-year through full appreciation of goods sold. The fast trading business delivered exceptional performance in the second quarter of 2026, with monthly order values increasing 137 percent year-on-year, helped by scale and store expansion. Contribution margins improved from 3.9 to 4.6 percent, supported by the inventory model that now contributes approximately 80 percent of order value, boosting gross margins. Franchise and e-commerce revenues are also gaining momentum, underscoring a scalable business mix. Despite higher marketing spend, consolidated EBITDA margins improved, reflecting early operating leverage. Eternal’s diversified model and Blinkit’s growth potential position the company well for sustainable value creation.
Swiggy – Target price: Rs 550
Swiggy’s medium-term outlook remains positive, driven by improving efficiency and operating leverage in food delivery and high-speed commerce. In Q2 2026, the company halved its quarterly cash burn through tighter cost control, targeted marketing and optimized incentives. Management expects trading to break even quickly in 1Q27, supported by higher dark store throughput and rising average order values. Non-grocery categories now represent 26 percent of gross order value, improving margin stability and diversification. Food delivery profitability continues to improve, reinforcing structural gains in unit economies. The planned fundraising of ₹100 billion increases financial flexibility to support growth amid renewed competition. With better visibility into profitability, disciplined capital use and a resilient business model, Swiggy is well-positioned for long-term value creation.
(The author is Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd)
(Disclaimer: Recommendations, suggestions, views and opinions expressed by experts are their own. These do not represent the views of the Economic Times)
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