Government Directive Sparks Debate On Quick Commerce
Shares of quick commerce companies Eternal and Swiggy were in focus on Tuesday following news of the government directing these companies to halt the 10-minute guarantee on their platforms. However, the stock price of both Swiggy and Eternal remained unaffected by the announcement, prompting Elara Capital to release a note explaining the potential impact of the move.
According to Elara Capital, the removal of the 10-minute benchmark from quick-commerce apps is net neutral to positive for Swiggy and Eternal. The brokerage firm believes that metro demand for quick-commerce has already been entrenched, thus ruling out any significant impact of the move.
Metro Demand And Optics-Driven Delivery Timelines
Elara Capital notes that the ten-minute delivery threshold was largely optics-driven rather than a fundamental business guarantee. Actual delivery timelines shown on these apps were largely dynamic, quite unlike the 30-minute pizza delivery that was guaranteed by Domino’s. This suggests that the removal of the 10-minute benchmark won’t be business-altering for either of the two counters.
The firm further points out that the move won’t impact volumes or growth either. Eternal itself clarified late Tuesday that there is no change in the business model of quick commerce business Blinkit after reports earlier in the day said it removed the 10-minute delivery promise from its branding to comply with government directions.
Worker Safety And Well-being
This development comes at a time when the quick-commerce space has been rocked by protests and concerns around workers’ well-being and earnings, leading to widespread protests and media chatter. As such, Union Labour Minister Mansukh Mandaviya met representatives of these platforms and told them to prioritize the safety of delivery partners instead of guaranteeing 10-minute deliveries.
Earlier this month, the Labour Ministry had 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, published on Dec 31.
Impact On Indian Stock Market
The Indian stock market has been closely watching the developments in the quick-commerce space, with many investors keenly eyeing the potential impact on Swiggy and Eternal. While the removal of the 10-minute guarantee may not have an immediate impact on the stock prices, it is likely to have a positive effect on the companies in the long run.
As the quick-commerce space continues to evolve, it is essential for companies to prioritize worker safety and well-being while maintaining their competitive edge. The government’s directive is a step in the right direction, and it will be interesting to see how the companies respond to the new guidelines.
Investor Insights
For investors, it is crucial to keep a close eye on the developments in the quick-commerce space and assess the potential impact on their portfolios. While the removal of the 10-minute guarantee may not be a significant concern for Swiggy and Eternal, it is essential to consider the broader implications of the government’s directive.
As the Indian stock market continues to grow and evolve, it is vital for investors to stay informed and up-to-date on the latest developments. By doing so, they can make informed investment decisions and navigate the complex landscape of the Indian stock market.
Conclusion
In conclusion, the removal of the 10-minute guarantee from quick-commerce apps is a positive move for Swiggy and Eternal, according to Elara Capital. While the impact on the stock prices may be minimal, the move is likely to have a positive effect on the companies in the long run. As the quick-commerce space continues to evolve, it is essential for companies to prioritize worker safety and well-being while maintaining their competitive edge.