Should you buy new-age stocks? Morgan Stanley bullish on Swiggy, Eternal; here is what targets suggest

Should you buy, sell or hold Swiggy or Eternal shares now? Foreign brokerage Morgan Stanley is bullish on the country's ever-evolving food delivery and quick commerce space. Both stocks began the day on a strong note in Tuesday's trade, followed by some selling pressure in Enternal in the second half of the session. In afternoon deals, Swiggy was last up 0.9 per cent at Rs 336.4 apiece while Eternal was down 0.9 per cent at Rs 239.3 apiece on BSE.

Morgan Stanley on Swiggy

The global brokerage has initiated coverage on the food delivery company with an 'overweight' rating and a target of Rs 405, implying 22 per cent potential upside from Monday's closing price. The brokerage has highlighted the company's improving execution in the domestic food delivery space.

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According to the brokerage, the company is expanding its quick commerce total addressable market (TAM) as well as making aggressive investments, which are being discounted by the market. Nevertheless, it is not transitioning in the topline numbers, according to Morgan Stanley.

Morgan Stanley has also mentioned that in a duopoly market, with the improved execution, Swiggy is close on the heels of closing the gap with food delivery on the margin front in the food delivery space.

Considering all the expansion and improved execution, the brokerage has upped the company's QC TAM estimates higher to $57 billion by 2030.

Further, its quick commerce margin breakeven to occur in six quarters, while an adjusted EBITDA breakeven is expected by H2FY29.

Morgan Stanley on Eternal

The brokerage has retained its optimistic view on the counter with the target pegged at Rs 320. Further, it reiterated it as its top pick within the space.

The global brokerage said that the company's market leadership In both the food delivery as well as quick commerce and superior cost structure are driving healthy unit economics versus peers.

Also, there is stronger balance sheet than peers, limiting risk of any further equity dilution.

The company offers favourable risk-reward and offers a decent floor at a Rs 200-220 price range.