Removal Of 10-Minute Delivery: A Positive Move For Swiggy, Eternal?
The Indian government’s recent directive to quick commerce companies, such as Swiggy and Eternal, to halt their 10-minute delivery guarantees has sent ripples through the industry. However, according to a note by Elara Capital, this move is unlikely to have a significant impact on the stock prices of these companies. In fact, the brokerage firm believes that the removal of the 10-minute benchmark from quick-commerce apps is net neutral to positive for Swiggy and Eternal.
The reason behind this optimism is that metro demand for quick-commerce has already been entrenched, making the 10-minute delivery guarantee largely redundant. Moreover, the actual delivery timelines shown on these apps were dynamic, unlike the 30-minute pizza delivery guarantee offered by Domino’s. This suggests that the removal of the 10-minute benchmark won’t be business-altering for either of the two companies.
What Does This Mean For Investors?
For investors, this move is likely to have a minimal impact on the stock prices of Swiggy and Eternal. As Elara Capital notes, the removal of the 10-minute benchmark won’t impact volumes or growth either. This is because the demand for quick-commerce services is already established, and the 10-minute delivery guarantee was largely a marketing tool rather than a fundamental business guarantee.
Furthermore, Eternal has clarified that there is no change in the business model of its quick commerce business, Blinkit, after reports suggested that it had removed the 10-minute delivery promise from its branding to comply with government directions. This reassurance is likely to calm investor nerves and prevent any significant sell-off in the stock.
Government Regulations And Worker Safety
The government’s directive to halt 10-minute delivery guarantees is part of a broader effort to regulate the quick-commerce industry and prioritize worker safety. Union Labour Minister Mansukh Mandaviya met with representatives of these platforms and instructed them to prioritize the safety of delivery partners instead of guaranteeing 10-minute deliveries.
This move comes amidst growing concerns around worker well-being and earnings in the quick-commerce space. The Labour Ministry has proposed a 90-day annual work threshold as the mandatory eligibility criteria for gig and platform workers to access social security under new draft rules on the Social Security Code 2020.
Impact On The Indian Stock Market
The removal of the 10-minute delivery guarantee is unlikely to have a significant impact on the Indian stock market as a whole. However, it may lead to increased scrutiny of the quick-commerce industry and its business practices. Investors should keep a close eye on developments in this space and be prepared for potential regulatory changes that could impact the stocks of companies operating in this sector.
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Conclusion
In conclusion, the removal of the 10-minute delivery guarantee from quick-commerce apps is unlikely to have a significant impact on the stock prices of Swiggy and Eternal. While this move may lead to increased scrutiny of the industry and its business practices, it is net neutral to positive for these companies. As the Indian stock market continues to evolve, it’s essential for investors to stay informed and adapt to changing regulatory environments.
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