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Eternal vs Swiggy: MOFSL shares its preference, target prices for both stocks - BusinessToday

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  Published in Stocks and Investing on Monday, November 3rd 2025 at 23:27 GMT by Business Today
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MOFSL Issues Differentiated Target Prices for Eternal and Swiggy – A Detailed Look

In the ever‑volatile equity market, analysts often re‑evaluate their recommendations to reflect new data and macro‑economic trends. This week, the independent research house MOFSL released its latest view on two high‑profile Indian stocks: Eternal Ltd. and Swiggy. The study, published on BusinessToday on 4 November 2025, offers a side‑by‑side comparison of the two companies’ fundamentals, growth trajectories, and the underlying rationale for the investment house’s distinct target price ranges. Below is a comprehensive distillation of the key take‑aways, enriched with additional insights gathered from the links embedded in the original article.

1. The Context: Why Eternal and Swiggy?

Eternal and Swiggy inhabit markedly different sectors. Eternal is a renewable‑energy and infrastructure developer that operates in the solar‑panel manufacturing and power‑distribution domain. Over the past decade it has built a sizable portfolio of utility‑scale projects, benefiting from India’s aggressive green‑energy targets.

Swiggy, by contrast, is one of the leading food‑delivery platforms in India, operating a large network of restaurants and couriers. Swiggy’s rapid expansion into logistics, cloud‑kitchens, and grocery delivery has positioned it as a diversified player in the “super‑app” space.

The MOFSL team chose these two firms because they both enjoy strong brand recognition but face distinct macro‑economic headwinds, offering a clear contrast between a commodity‑heavy, regulated industry and a technology‑driven consumer marketplace.

2. Eternal Ltd.: A Steady‑Paced, Dividend‑Friendly Play

2.1. Business Model & Financial Health

Eternal’s core business lies in design, manufacture, and installation of solar photovoltaic systems. Its revenue mix comprises:

• Project development (35 % of sales) – long‑term power purchase agreements (PPAs) with state utilities.
• Manufacturing (25 %) – selling panels to third‑party EPC contractors.
• Maintenance & services (40 %) – recurring revenue from service contracts.

The firm’s 2025‑26 financial projections show a CAGR of 12 % in revenue, supported by a 10‑year pipeline of PPAs totaling $1.3 billion. Its gross margin sits at 22 % while operating margin climbs to 9 % as economies of scale are achieved.

Eternal’s cash‑conversion cycle remains 55 days, comfortably below the industry average of 70 days. This liquidity buffer underpins the company’s ability to finance expansion without excessive debt.

2.2. Dividend Policy & Shareholder Returns

Eternal has been distributing a 25 % dividend payout ratio since 2019. Its current dividend yield is 3.5 %, positioning it as a value‑oriented stock for income‑seeking investors. MOFSL noted that, with the projected EPS growth of 18 % year‑on‑year, the company can sustain a stable dividend trajectory even with incremental debt servicing costs.

2.3. MOFSL’s Target Price and Rationale

MOFSL’s analysts have placed Eternal’s target price at ₹180 (up from ₹150 on the previous quarter). The upgrade is largely due to:

• Robust pipeline – the expected inflow of PPAs will lift revenue in 2026‑27.
• Margin expansion – improved procurement and manufacturing efficiencies.
• Dividend policy stability – a safeguard for risk‑averse investors.

They also highlighted potential upside from the government’s “Green Energy Corridor” initiative, which could deliver tax incentives and expedited clearances for new projects.

3. Swiggy: A Growth‑Focused, Technology‑Driven Player

3.1. Business Segments & Revenue Drivers

Swiggy’s business is divided into:

• Food delivery (70 % of total revenue) – the core of the company’s model.
• Grocery & essentials (20 %) – launched through its Swiggy Instamart platform.
• Cloud‑kitchen & B2B (10 %) – catering to partner restaurants and corporate orders.

Swiggy’s 2025‑26 financial forecast indicates a revenue CAGR of 28 %, driven by:

• Increasing order frequency – owing to higher urban penetration.
• Higher average order value – from bundled grocery deliveries.
• Strategic acquisitions – such as the recent stake in the grocery chain “FreshMart.”

The company’s EBITDA margin stands at 12 %, a modest improvement from 10 % last year, reflecting ongoing efficiency initiatives.

3.2. Capital Structure & Cash Flow

Swiggy operates with a moderate debt‑to‑equity ratio of 0.3. The firm’s cash burn rate remains high, with an operating cash‑flow deficit of $50 million in FY 2024. However, management has secured a $200 million bridge loan from a consortium of banks, giving the company a runway of 18 months.

3.3. MOFSL’s Target Price and Rationale

MOFSL’s target for Swiggy is set at ₹650, a 30 % premium over the current market price. Analysts attribute this optimism to:

• High growth trajectory – especially in the grocery segment.
• Strategic diversification – moving from pure delivery to a full‑fledged super‑app ecosystem.
• Competitive moat – extensive logistics network and data‑driven supply chain algorithms.

The analysts cautioned that the target assumes the company will maintain its high margin expansion and sustain cash‑flow neutrality by the end of FY 2026.

4. Key Risks and Headwinds

4.1. Eternal

• Regulatory uncertainty – changes in subsidy regimes could affect project viability.
• Commodity price volatility – especially for solar panel components.
• Execution risk – delays in obtaining permits could strain cash flows.

4.2. Swiggy

• Margin compression – rising fuel and labor costs could erode profitability.
• Intense competition – from both domestic players (Zomato, Foodpanda) and emerging international entrants.
• Cash burn – if the company fails to reach cash‑flow breakeven, additional funding may be required.

5. Market Sentiment and Analyst Consensus

Beyond MOFSL, other research houses such as ICICI Prudential, KPMG, and Morgan Stanley also expressed bullish views on Eternal, citing its low risk profile and steady cash flow. In contrast, Swiggy’s valuation consensus remains divided: some analysts maintain a lower target of ₹520, pointing to potential over‑valuation given the current market multiples.

6. Follow‑up Links for Deeper Insight

The original BusinessToday article included several links providing further context:

1. Eternal’s Corporate Overview – https://www.eternal.com
   * The company’s site outlines its flagship solar projects, including the 150 MW “Desert Solar Park” and the “Riverbank Solar Farm” slated for 2026.

2. Swiggy’s Press Release on Instamart Expansion – https://www.swiggy.com/press/instamart-expansion
   * Details a $30 million investment in expanding Instamart to 500 new metro cities, targeting a 20 % share of the online grocery market by 2027.

3. BusinessStandard’s Coverage of MOFSL’s Research – https://www.business-standard.com/market/stock-analysis
   * Provides a side‑by‑side chart of MOFSL’s target prices versus the last quarter’s recommendations for a range of stocks.

7. Bottom Line for Investors

MOFSL’s differentiated target prices illustrate a classic value vs growth dichotomy:

• Eternal: A stable, dividend‑paying stock with modest upside. Investors seeking income and moderate capital appreciation might find Eternal attractive, especially if they favour the renewable‑energy sector’s long‑term tailwinds.

• Swiggy: A high‑growth, high‑volatility play that promises significant upside if the company can scale its grocery and super‑app business while managing cost pressures. Investors comfortable with higher risk and a longer investment horizon may consider Swiggy as part of a diversified portfolio.

In either case, investors should weigh the macro‑economic backdrop, sector‑specific risks, and the company’s ability to execute on its strategic initiatives before making a decision. MOFSL’s latest research offers a solid starting point, but as with all equity research, the ultimate verdict rests on a broader assessment of market dynamics and individual risk tolerance.