LPG Cylinder Shortage Hits Swiggy, Eternal Stocks: Shares Drop 7% in a Week: What Next? Check Target Price

The share prices of Swiggy and Eternal have declined nearly 8% over the past five trading sessions amid concerns about a commercial LPG cylinder shortage weighing on the restaurant industry. The supply disruption, triggered by the ongoing tensions between Iran, Israel and the United States, has affected shipments passing through the Strait of Hormuz, a critical global energy route.

As a result, several restaurants across India are reporting delays in LPG cylinder deliveries, raising concerns about operational disruptions for food businesses and delivery platforms.

Swiggy shares were trading 0.11% lower at Rs 284.4 per share on BSE at 12 pm with a market capitalisation of Rs 78,503.32 crore. The stock had declined around Rs 4.46% in one week. Eternal share price was trading 0.13% lower at Rs 223.5 per share at 12:05 pm on BSE with a market capitalisation of Rs 2,15,685.34 crore. The stock has declined 6.95% in one week.

How LPG Supply Crisis Impacts Zomato, Swiggy?

Eternal owned Zomato and Swiggy are one of the two major food delivery platforms in India. The commercial liquified petroleum gas (LPG) cylinders disruptions could create a near-term hiccup for the restaurants business if the supply crunch persist throughout the month, noted Motilal Oswal in its report released on Thursday, March 12.

"Food delivery (FD) GOV growth has been improving in recent quarters (exhibit 5), but the LPG disruption could create a near-term hiccup if shortages persist through March. Reduced menus, limited cooking hours or temporarily shut kitchens at some restaurants may limit order availability on platforms, leading to temporary moderation in 4Q FD order volumes," noted the brokerage in its report.

The brokerage mentioned that the LPG supply shortage could hit the company's order volume in near term.

"If the commercial LPG shortage persists through the remainder of March, it could begin to reflect in a temporary decline in order volumes in 4Q," read the Motilal Oswal report.

Swiggy Target Price

Motilal Oswal, in its report released in January, gave a 'Buy' rating to Swiggy shares with a target price of Rs 440 per share.

Eternal Target Price

The brokerage gave a 'Buy' rating to Eternal share price, with a target of Rs 360 per share. "Our TP of INR360 implies a 27% upside from the current level. We reiterate our BUY rating on the stock."

Disclaimer: The views and recommendations expressed are solely those of the individual analysts or entities and do not reflect the views of Goodreturns.in or Greynium Information Technologies Private Limited (together referred as "we"). We do not guarantee, endorse or take responsibility for the accuracy, completeness or reliability of any content, nor do we provide any investment advice or solicit the purchase or sale of securities. All information is provided for informational and educational purposes only and should be independently verified from licensed financial advisors before making any investment decisions.