The growing intensity of discount wars in the quick commerce (QC) space is likely to delay margin recovery of the sector, highlighted Swiss investment bank UBS in its recent report.
According to UBS’s pricing tracker, the discounts have expanded by 200-300 basis points compared to the levels seen in September, and they have increased further in January 2026 relative to November 2025.
“Our analysis of discounts on QC platforms, recent channel checks and a review of app download and usage metrics on Sensor Tower shows competition in the Indian QC space has intensified since Sep 25 and remains intense into Jan ’26 likely delaying margin recovery for the sector,” said UBS.
The international brokerage noted that Amazon and Zepto have become the most fervent discounters in the online marketplace, providing the most substantial promotional offers, whereas Blinkit has kept its discount levels comparatively lower, though still higher than in previous times.
This competitive landscape illustrates the fierce struggle for market share in India’s quick commerce sector, where securing customers through aggressive pricing has turned into a common tactic, according to UBS.
Nevertheless, the brokerage is optimistic that the introduction of new platforms and ongoing category expansions are helping to broaden the total addressable market, thus providing a solid growth trajectory over the coming years.
Target Price Revisions
Although, UBS has maintained a ‘Buy’ rating on Eternal but has reduced its price target from ₹400 to ₹Rs 375 per share. For Swiggy, the brokerage has also maintained its ‘Buy’ rating while decreasing the target price from ₹580 ₹510.
Further, UBS has lowered its adjusted EBITDA projections for the next two to three years by 10-18% for Eternal and by 12-28% for Swiggy. Nonetheless, it stated that the recent decline in stock prices, combined with a solid growth outlook, leads to a positive sentiment about the sector.
Margin Recovery Timeline Prolonged
Margin Recovery Timeline Prolonged UBS’s recent downward adjustment has significantly affected the timeline expected for the sector to see sustainable margin enhancements.
For Eternal’s Blinkit division, UBS now predicts the quick commerce unit will achieve breakeven in FY27, a year later than the previously anticipated FY26, marking a crucial point that has been postponed by a full fiscal year. Similarly, Swiggy’s Instamart has experienced a notable decline in its margin trajectory, with adjusted EBITDA margins dropping by 120-130 basis points during the period from FY27 to FY30.
The pressure on margins illustrates the reality that, although ongoing network and category expansions are contributing to an enlarged overall addressable market, the improvement in sector profitability remains out of reach in the short term.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
