Morgan Stanley’s Warning: Earnings Downgrade Cycle Far from Over
Morgan Stanley has cut price targets across a clutch of India’s listed internet and technology names like Delhivery, Eternal, Swiggy, and MakeMyTrip. The brokerage has cautioned that the earnings downgrade cycle is far from over amid slowing growth, rising competition, and margin pressures.
Impact on Key Stocks
The brokerage lowered its price target on Delhivery to Rs 445 from Rs 450, Swiggy to Rs 414 from Rs 455, and Eternal to Rs 417 from Rs 427. MakeMyTrip also saw a sharp cut, with the target lowered to $113 from $178.
December Quarter Expectations
For the December quarter (Q3FY26), Morgan Stanley expects momentum in quick commerce to moderate. Net order value growth is seen slowing quarter-on-quarter to around 16% for Eternal and 13-14% for Swiggy, compared with much stronger growth in the previous quarter.
Adjusted EBITDA Losses
While adjusted EBITDA losses as a proportion of gross order value should improve sequentially, losses remain large in absolute terms — estimated at Rs 1,400 crore for Eternal and Rs 890 crore for Swiggy.
Online Travel and Logistics
In online travel, MakeMyTrip is expected to deliver steady growth but at the cost of margins. Adjusted revenue growth is pegged at about 19% year-on-year in constant currency terms.
Logistics player Delhivery continues to see robust volumes, with express parcel growth estimated at 35.5% year-on-year and revenue growth accelerating to 18%.
Key Takeaways for Investors
Morgan Stanley’s report highlights the challenges facing India’s top internet stocks. Investors should be cautious and consider the potential impact of slowing growth, rising competition, and margin pressures on their portfolios.
To stay ahead of the curve, investors can explore other investment opportunities, such as Nifty 50 Index or Sensex Index, or consider diversifying their portfolios with Indian stock market news and analysis.