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UBS Slashes Quick Commerce Margins, Govt Ends 10-Minute Delivery Mandate

UBS has significantly reduced its margin estimates for quick commerce giants Eternal and Swiggy, citing intensified competition and increased discounting that will delay profitability recovery by several quarters. The brokerage cut Eternal's adjusted EBITDA forecasts for FY26-27 by 15-20% and lowered Swiggy's quick commerce margins. In a related development, the government has successfully urged major delivery platforms to abolish the mandatory 10-minute delivery deadline to improve gig worker safety. This regulatory push, coupled with a fierce discount war among players like Amazon and Zepto, is reshaping the competitive landscape of India's quick commerce sector.

Key Points: UBS Cuts Eternal, Swiggy Margins; 10-Minute Delivery Scrapped

  • UBS cuts Eternal's EBITDA by 15-20%
  • Swiggy's QC margins reduced 100-120 bps
  • Govt asks platforms to remove 10-minute delivery rule
  • Competition, higher discounts delay margin recovery
  • Price targets lowered for both companies
3 min read

UBS cuts margin estimates for Eternal, Swiggy; Govt pushes QC platforms to abolish 10-minute delivery deadline

UBS reduces quick commerce EBITDA forecasts for Eternal & Swiggy due to intense competition. Govt pushes platforms to abolish 10-minute delivery deadline for worker safety.

"Estimate changes, QC margin recovery pushed by a few quarters - UBS Report"

New Delhi, January 14

The margins EBITDA for the quick commerce giants like Eternal have been reduced by 15-20 per cent for FY26-27 by UBS on Wednesday. Earlier, on Tuesday government has asked major delivery aggregators to remove the mandatory 10-minute delivery deadline.

In its report released on Wednesday, UBS said that margin recovery in the quick commerce (QC) segment is now expected to be pushed back by a few quarters due to rising competition and higher discounting across platforms.

The brokerage said it has cut Eternal's quick commerce adjusted EBITDA estimates for FY26-27 by 15-20 per cent, while reducing Swiggy's QC margins by 100-120 basis points.

It stated "Estimate changes, QC margin recovery pushed by a few quarters. We cut Eternal's QC adj. EBITDA estimates for FY26-27 by 15-20 per cent".

UBS noted that while it has lowered margin expectations, gross order value (GOV) and net order value (NOV) estimates for Swiggy remain broadly unchanged. Eternal's GOV and NOV estimates have been marginally raised.

The brokerage also said its estimates for food delivery GOV, NOV and adjusted EBITDA are broadly unchanged for FY27-28.

Due to the lower EBITDA outlook for quick commerce, UBS has also reduced its price targets for both companies. The revised price target now stands at Rs 375 for Eternal and Rs 510 for Swiggy.

On the outlook for margins, UBS said competition in the Indian quick commerce space has intensified since September 2025 and continues to remain high into January 2026.

The report added that analysis of discounts, recent channel checks and app usage data from Sensor Tower indicate that intense competition is likely to delay margin recovery for the sector.

UBS further said that discounts across QC platforms have increased by an average of 200-300 basis points compared to September levels and have risen further in January 2026 compared to November 2025. Among major players, Amazon and Zepto are offering the highest discounts, while Blinkit continues to offer the least discounts, although these are higher than earlier levels.

On food delivery, UBS said growth is improving and competition remains broadly stable. December 2025 food delivery receipts data show industry volume growth in Q3FY26 is tracking at around 16 per cent, compared to 7-10 per cent in the previous three quarters.

UBS attributed this improvement to low average delivery value initiatives that helped expand usage among existing customers.

Union Labour Minister Mansukh Mandaviya on Tuesday reportedly convinced major delivery aggregators such as Blinkit, Zepto, Zomato, and Swiggy to eliminate the mandatory 10-minute delivery requirement. This action is intended to enhance safety and working conditions for gig workers.

- ANI

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Reader Comments

R
Rohit P
As an investor, this UBS report is concerning. The discount wars are clearly hurting profitability. When will these companies focus on sustainable unit economics instead of burning cash for market share? Eternal and Swiggy need a new strategy.
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Aman W
Honestly, I love the discounts! 😅 If Amazon and Zepto are giving more cashback, I'm switching my app. As a customer, intense competition is great for my wallet. But I do hope the delivery guys are paid fairly amidst all this.
S
Sarah B
The focus on low average delivery value to drive growth is interesting. It shows they're trying to make quick commerce a daily habit, not just for big grocery hauls. But with margins down, can this model last?
K
Karthik V
This is the reality check the sector needed. You can't have 10-minute promises, deep discounts, *and* healthy margins. Something has to give. The government stepping in on worker safety is correct, but the financial pressure from competition is the bigger issue.
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Nisha Z
While I appreciate the concern for gig workers, I hope this doesn't lead to complacency and slower deliveries. The convenience of quick commerce is why we use it. Companies must find a balance between speed, safety, and cost.

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