Rising Fuel Prices to Impact Swiggy and Eternal's Delivery Costs
Fuel price hike to create cost pressure for Swiggy, Eternal: Report
Image: Asianet Newsable
A recent report by Elara Capital indicates that the recent fuel price hike of approximately ₹4 per litre could impose cost pressures on food delivery services like Swiggy and Eternal. While the immediate impact on earnings is manageable, further increases in fuel prices could lead to significant cost burdens for these platforms.
- 01The average delivery cost is estimated at ₹45 per order for Eternal and ₹55 for Swiggy, with fuel accounting for about 20% of these costs.
- 02The current fuel price increase is expected to negatively impact earnings by approximately ₹0.44 per order.
- 03In a worst-case scenario, a further rise in fuel prices to ₹10 per litre could increase the per-order impact to ₹1-1.2.
- 04Swiggy may face a 10-12% impact on FY27 adjusted EBITDA if costs are not passed on to customers, compared to 4-5% for Eternal.
- 05Eternal is better positioned to absorb costs due to its larger scale and premium customer base.
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According to a report by Elara Capital, the recent fuel price hike of approximately ₹4 per litre has raised petrol and diesel prices by nearly 4%, which could create near-term cost pressures for food delivery platforms like Swiggy and Eternal. The report suggests that while gig workers may demand higher payouts, the overall impact on company earnings is expected to remain manageable. Currently, the average delivery cost for Eternal is around ₹45 per order, while Swiggy's is about ₹55. Fuel costs account for nearly 20% of these delivery expenses, translating to an implied fuel cost of ₹9-10 per order, with the recent hike potentially adding ₹0.44 to this figure. In a worst-case scenario, if fuel prices rise to ₹10 per litre, the per-order impact could escalate to ₹1-1.2, affecting Swiggy's FY27 adjusted EBITDA by 10-12% and Eternal's by 4-5%. The report indicates that Swiggy may face greater challenges in passing on these costs to customers, while Eternal is in a stronger position due to its scale and customer base.
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Rising fuel costs may lead to increased delivery charges for customers, affecting the affordability of food delivery services.
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