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In our quick commerce (QCom) deep dive, we study the emergence of various retail formats across 11 geographies. Our conclusion is that the dominant retail format in a particular geography is determined by how societies are organized. By mapping variables on the demand-side (dwelling size, mobility profile, and population density) and the supply-side (gig rider wages and retail real estate costs), we identify the most suitable retail formats. We believe the confluence of such demand and supply dynamics positions QCom as a dominant format in India. We see strong growth potential of QCom in tier 2/3 cities, which are expected to be key drivers of future growth. In our view, Swiggy and Eternal are well placed to capitalize on this opportunity. We initiate coverage on Swiggy with BUY and DCF-based TP of Rs350. We maintain BUY on Eternal with DCFbased TP of Rs370.

Demand-side variables structurally favor QCom in India

On the demand front, three variables define the boundaries where retail spending occurs: 1) the urban dwelling size per person determines storage capacity and, therefore, minimum purchase frequency; 2) the urban mobility profile determines carrying capacity per trip, which sets the floor on purchase frequency and the ceiling on basket size; 3) urbanization and population-weighted density (PWD) determine whether delivery economics are viable. When these variables align, a single format dominates decisively, and when they diverge, multiple formats coexist. With smaller dwelling sizes, limited mobility, and high PWD, QCom and kirana emerge as dominant retail formats.

Supply-side economics reinforce QCom's structural advantage

On the supply front, two factors—gig delivery rider wages and urban real estate costs— determine format viability. Gig delivery rider wages set the floor price of last-mile fulfilment and determine if an average grocery basket can be delivered profitably. Urban retail real estate costs, in turn, set the price of the customer-facing space, with the retailto-warehouse rent gap indicating the cost advantage of shifting fulfilment from prime retail real estate locations to dark stores in off-prime areas. India, with relatively high real estate costs and low gig worker wages, combined with constrained consumer mobility and high PWD, presents a favorable case for QCom.

Eternal: Execution excellence to capitalize on the lucrative QCom opportunity

Our view rests on three pillars: the long-term QCom opportunity in India, strong underlying unit economics at maturity, and Blinkit's superior execution vs peers. Blinkit has already reached adjusted EBITDA breakeven, while competitors are still struggling to achieve contribution margin profitability. A robust cash balance (Rs178.2bn as of Q3FY26), higher profitability in the food delivery business, and the largest dark store network in India ensure Blinkit faces no capital or operational constraints to expansion. The company is, therefore, expanding into tier 2/3 cities, which will continue to drive long-term growth. Sustained competitive intensity in QCom remains the key risk. We maintain BUY on Eternal with DCF-based target price of Rs370 which implies a 30.2x multiple for FY28E adj EBITDA food delivery and 1.71x multiple for FY28E QCom NOV. Eternal remains our preferred pick in the sector given superior execution.

Swiggy: Strong Food delivery and QCom play with high leverage

We initiate coverage on Swiggy with BUY and DCF-based target price of Rs350, which implies a 34.1x multiple for FY28E adj EBITDA food delivery and a 0.39x multiple for FY28E QCom NOV. Swiggy is one of the largest players in India's promising QCom space, with a large footprint, a broad customer base, and scale. While Swiggy’s Instamart trails Eternal’s Blinkit in overall unit economics, it demonstrates stronger profitability than the broader challenger pack. Its expansion into MegaPods—larger-format dark stores with a wider SKU assortment—positions it to drive SSSG without proportional store additions. The food delivery business provides a stable profit engine that cross-subsidizes QCom investments. On valuations, Swiggy's enterprise value sits at~28% of Eternal's despite operating at 41% and 75% of Eternal's scale in QCom Net Order Value (NOV) and food delivery Gross Order Value (GOV), respectively. The valuation discount is largely explained by the profitability gap in both—the QCom and food delivery businesses.

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