Jefferies says Zepto's IPO plans, Swiggy's Rs 10,000-crore QIP won't trigger quick-commerce price war

Jefferies on quick commerce

After Swiggy raised Rs 10,000 crore through QIP and reports claimed Zepto may soon file its IPO papers, investors remained concerned about rising competition in India's quick-commerce industry. Jefferies however feels that these developments are unlikely to worsen the competitive dynamics in the sector.

In its latest note, the international brokerage said that the Swiggy and Zepto need to demonstrate profitability for public markets, and their respective fund-raising may not trigger price wars in the quick-commerce sector.

Blinkit continues to remain market leader:

Jefferies added that Eternal-owned Blinkit continues to be the leader in the industry, with best-in-class profitability due to its growth-first strategy and aggressive store expansion. The international brokerage kept a 'Buy' call for the stock, with a target price of Rs 480 per share, implying an upside potential of 69 percent from the previous closing price.

According to Jefferies, the recent moderation in Zomato's growth is unlikely to impact valuation.

Jefferies added that entry by horizontals such as Amazon, Reliance and Flipkart are more defensive, but will take time to scale. It forecasts minor impact in the October-December quarter of the ongoing financial year 2026 due to festive season shift and inventory pricing adjustments, adding that the underlying demand trends remain intact.

Swiggy QIP:

Earlier last week, Swiggy announced that it has completed its Qualified Institutions Placement (QIP) by raising Rs 10,000 crore (around $1.2 billion) from a total of 21 mutual funds, eight domestic insurance companies and close to 50 global investors.

Among the mutual funds, SBI MF, ICICI Prudential MF, HDFC MF, Nippon India MF, Kotak MF, Mirae MF, Axis MF and Birla MF and others were among the key investors. On the insurance side ICICI Prudential Life Insurance and HDFC Life Insurance, among others participated in the QIP.

Capital Group, Government of Singapore (GIC), BlackRock, Nomura Asset Management, Temasek, Fidelity and Goldman Sachs Asset Management among others are the key global investors who participated in Swiggy’s QIP.

"The strong response to our QIP from both global and domestic institutional investors, including new investors since our IPO last year, reflects deep confidence in Swiggy’s business fundamentals, disciplined execution, and long-term value creation roadmap,” Sriharsha Majety, MD & Group CEO, Swiggy Limited, said.

Zepto's IPO plans:

Zepto is preparing to file for an initial public offering (IPO) to raise  about $500 million as early as next week, Bloomberg reported citing people familiar with the matter. The company is working with Axis Bank, Motilal Oswal Investment Advisors, and the local units of Morgan Stanley, HSBC Holdings, and Goldman Sachs Group to submit its draft IPO papers through a confidential route, the report added.

The 10-minute delivery platform's maiden public issue is expected to include a fresh issue and an offer for sale (OFS) of shares by existing investors, with proceeds earmarked for expansion, the report said. It added that talks are ongoing and details including the size and timing of the IPO may still change.

The proposed IPO will come after Zepto’s $450 million fundraising in October, which valued the company at $7 billion.

Swiggy, Eternal share prices:

The shares of Swiggy and Blinkit-parent Eternal had dropped in trade yesterday, after the report on Zepto's IPO plans came out. However, the note by Jefferies may have soothed some investor concerns on rising price wars, pushing the stocks into the green.

Swiggy shares rose more than 2 percent to trade at Rs 405.4 apiece, while Eternal shares also gained over 2 percent to trade at Rs 290.50 apiece.

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