In a significant boost to investor sentiment, Morgan Stanley has turned bullish on India's quick service restaurant (QSR) and quick commerce sector, with a sharp focus on two companies: Swiggy and Zomato. After previously highlighting Swiggy, the global investment firm has now shifted its radar to Zomato's parent company, Eternal, triggering a rally in its stock.
Zomato Stock Soars to 5-Month High
Zomato shares witnessed a sharp uptrend in recent trading sessions, surging by nearly 6% in a single day to touch the ₹260 level — a five-month high. Over the past week, the stock has risen by approximately 16%, and in the past month, it has delivered a return of more than 25%.
A major trigger for this bullish momentum was Zomato’s inclusion in the Nifty 50 index on March 28, 2025. This led to a surge in passive fund inflows, with analysts expecting up to USD 602 million to flow into the stock as a result of its addition to the benchmark index. Since then, Eternal’s stock has rallied by about 29%.
Strong Buying by BNP Paribas Fuels Optimism
Further fueling the rally was a large block deal in which BNP Paribas purchased shares worth ₹1,489 crore in Eternal. The transaction included approximately 6.24 crore shares at an average price of ₹238.25 per share. Though the firm sold around 1.9 lakh shares afterward, its net position remains highly positive, contributing to market confidence.
Morgan Stanley Raises Target and Growth Estimates
Morgan Stanley has now rated Eternal (Zomato) as “Overweight” and set a target price of ₹320 — an upside from the current market price of around ₹260. Swiggy also received an “Overweight” rating with a target of ₹405, compared to its current price of about ₹367. However, the brokerage firm appears more bullish on Eternal than on Swiggy.
The key reason behind this confidence is Morgan Stanley’s revised outlook for India’s quick commerce market. Previously estimated at USD 42 billion, the firm has now raised the forecast to USD 57 billion by 2030. It also upgraded its growth outlook for Eternal’s quick commerce segment, increasing its gross order value projection by 9% to 11% for FY26–FY29.
Improving Margins and EBITDA Outlook
One of the strongest positives in Morgan Stanley’s report is the expected improvement in margins in Eternal’s food delivery business. The firm anticipates margins to grow from 4.8% in FY26 to 6% in FY28. This reflects a significant improvement in operational efficiency.
The adjusted EBITDA is expected to witness a massive surge. From ₹179 crore in FY22, Morgan Stanley estimates this figure could rise to ₹6,548 crore by FY28. Such an impressive jump is being seen as a core reason behind the stock's re-rating and strong market performance.
Strategic Advantages for Zomato and Eternal
Morgan Stanley believes Zomato will maintain leadership in the quick commerce segment thanks to its stable competitive environment, consistent growth in order volumes, and improving food delivery margins. The company’s dominant market share and operational leverage are expected to continue driving profitability.
Eternal, as the parent company, is reaping the benefits of Zomato’s performance, and with such promising projections, the stock has become a favorite among investors.
Eternal’s surge reflects a broader optimism around India’s rapidly growing digital commerce and food delivery ecosystem. With large institutional backing, index inclusion, and positive margin projections, both Zomato and its parent company appear well-positioned for sustained growth. As the QSR and quick commerce sectors expand, these companies are likely to remain in the limelight for both retail and institutional investors.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult with a financial advisor before making any investment decisions.
