Swiggy, Eternal Stocks Surge as Zepto IPO Valuation Cut Signals End of Cash-Burning War

Swiggy, Eternal Stocks Surge as Zepto IPO Valuation Cut Signals End of Cash-Burning War​

Shares of quick commerce rivals Swiggy and Eternal have seen significant rallies following reports that Zerpto is revising its post-money IPO valuation. The shift in expectations suggests the aggressive price wars dominating the market may be entering a more disciplined phase, benefiting established listed players.

Market participants reacted positively to the news, as investors anticipate reduced spending on discounts and customer acquisition by Zepto. This realization has buoyed stock prices, with Swiggy shares rising nearly 4% at Rs 268 by around 1 pm on July 28. Eternal also gained 3%, trading at Rs 305.

The Reset: Deconstructing Zepto’s IPO Valuation​

The catalyst for the market movement is the revised valuation being tested by Zepto during discussions with investors. Moneycontrol reported that Zepto is exploring a post-money IPO valuation of $3 billion, down from the initial target of $5 billion.

This pivot reflects increasing scrutiny on the high cash burn rates fueling rapid expansion in the quick commerce segment. A lower valuation and potentially smaller fund raise signal that public market investors are wary of funding unchecked growth at any cost. The revised figures translate to a pre-money valuation of roughly $2.5 billion (around Rs 24,000 crore).

Financial Fortitude: Swiggy and Eternal’s Competitive Edge​

The prospect of a rational competitive environment is particularly welcomed by both Swiggy and Eternal. Both companies possess substantial balance sheet strength that positions them well against potential future competition in the quick-commerce space.

At the end of the last quarter, Swiggy held approximately Rs 10,800 crore in cash and short-term investments. Eternal maintains a robust financial position, holding roughly Rs 16,000 crore in cash and liquid investments. This ample financial flexibility allows both companies to focus on improving profitability rather than maximizing growth alone.

Market Sentiment Shifts from Growth Hype to Sustainable Returns​

The latest valuation discussions represent a sharp reset compared to earlier market estimates. Zepto had received SEBI’s approval for its IPO in April, when valuations were estimated around $7 billion. Subsequently, reports placed existing investments at a pre-money valuation of about $4.3 billion and a post-money valuation of around $5.1 billion.

The current shift reflects a broader change in public market sentiment. Where private investors might prioritize rapid expansion, the public markets are increasingly rewarding sustainable growth and profitability. This focus on returns is viewed as highly positive for Swiggy and Eternal, who have successfully raised significant capital and listed balances.

Stock Performance Reflects Investor Optimism​

The bullish sentiment surrounding the companies has been reflected in their recent trading performance. Ahead of Zepto’s market debut, investors are reassessing the competitive landscape by betting on proven resilience.

Swiggy shares have gained around 6% over the last two trading sessions. In parallel, Eternal stock has risen more than 9%, underscoring investor confidence in the stable and financially backed approach these rivals are taking in the challenging quick-commerce market.