Eternal, which houses food delivery giant Zomato and quick commerce platform Blinkit, emerged as the third-highest bought stock by mutual funds in May, attracting about Rs 5,300 crore in investments according to Prime Database estimates. Swiggy wasn’t far behind, drawing another Rs 2,294.87 crore from fund houses betting on the food delivery and quick commerce revolution.
The buying frenzy was led by marquee fund houses including SBI MF, ICICI Prudential, Motilal Oswal MF, and Kotak Mahindra Mutual Fund for Eternal shares. Swiggy saw robust demand from Kotak Mahindra Mutual Fund, Nippon India Mutual Fund, HDFC Mutual Fund, Mirae Asset Mutual Fund, and Invesco Mutual Fund.
ITC & HDFC Bank Lead Overall Buying
While new-age stocks grabbed headlines, traditional favorites ITC and HDFC Bank topped the overall buying charts with mutual funds investing about Rs 8,000 crore and Rs 5,800 crore respectively, according to the estimate. Other stocks on the buying list included Airtel, IndiGo, SBI, Kotak, PNB Housing Finance, and Asian Paints. The prior month saw several block deals in ITC, Bharti Airtel, and InterGlobe Aviation with sizeable fund participation.
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Nykaa & BSE Face the Axe
On the selling side, Max Financial topped the list with Rs 1,100 crore in outflows. Nykaa faced significant selling pressure with Rs 1,100 crore worth of shares offloaded by mutual funds. BSE also witnessed substantial outflows of roughly Rs 800 crore, despite its shares more than doubling in the last three months alone.
Other stocks on the sell list included Container Corporation of India, Coal India, Samvardhana Motherson, Indian Hotels, Max Healthcare, and Hitachi Energy.
What Should Investors Do?
The mutual fund buying comes even as Eternal shares have declined 9% year-to-date, while Swiggy has lost 33% of its value amid concerns about plateauing growth in the food delivery market and pricing battles delaying profitability in quick commerce.
However, analysts are turning increasingly bullish. BofA’s Sachin Salgaonkar noted that “quick-com revenue momentum remains strong not only in urban markets but also in Tier 2 cities.”
“We return more optimistic on Blinkit’s (Zomato’s quick com) competitive positioning given strong execution. We increase our estimates marginally to factor in lower than expected competitive intensity,” Salgaonkar said. BofA raised its quick commerce EV/GOV multiple for Zomato/Swiggy from 0.4X/0.25X to 0.5X/0.35X, pushing price targets for Zomato/Swiggy from Rs 245/295 to Rs 270/315.
Despite the optimism, Salgaonkar cautioned that “competition is likely to be high in next 6-12 months as most platforms remain aggressive on market share gains.”
ICICI Securities highlighted encouraging signs of reduced competitive intensity in the quick commerce space. “We note that pricing differential with Blinkit has materially reduced for both Instamart and Zepto from the levels of Feb’25,” the brokerage said.
“Selling prices in the staples category have increased in the range of 2–8% in the last four months. This, we think, is indicative of reducing competitive intensity with regards to discounting strategies. We believe this could positively surprise investor expectations,” ICICI Securities added.
The brokerage maintained its BUY rating on Eternal with a target price of Rs 310 based on a three-stage DCF model assuming 11.5% WACC and 5% terminal growth. For Swiggy, ICICI Securities reiterated its BUY rating with a target price of Rs 740 using similar parameters.
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(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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