Rising fuel prices could put short-term cost pressure on food delivery and quick commerce companies like Eternal and Swiggy, but the overall impact should stay manageable, according to a report by Elara
Capital.
The report said that the recent fuel price hike of about Rs 4 per litre has raised petrol and diesel prices by nearly 4 per cent because of geopolitical tensions and high crude oil prices. Elara Capital said that even if gig workers ask for higher pay due to the fuel price increase, the effect on company earnings should stay under control in the near term.
The report said, “Any increase in fuel cost can directly affect delivery economics by lowering delivery partner earnings and possibly increasing the risk of payout pressure.” Elara Capital estimated that the average delivery cost is about Rs 35-50 per order for quick commerce and Rs 55-60 per order for food delivery. On average, the delivery cost is about Rs 45 per order for Eternal and about Rs 55 per order for Swiggy.
If fuel makes up about 20 percent of delivery costs, the fuel cost per order is around Rs 9-10 on average. The report estimated that the current 4 percent fuel price increase would have a negative impact of about Rs 0.44 per order. But in a worst-case scenario, if fuel prices rise further from the current Rs 4 per litre hike to about Rs 10 per litre in the coming months, the per-order impact could go up to around Rs 1-1.2 per order. This could mean a 4-5 percent impact on FY27 adjusted EBITDA for Eternal and about 10-12 percent for Swiggy, if the extra costs are not passed on to customers.
Elara Capital said the impact is expected to be higher for Swiggy since the company is still working towards breaking even in quick commerce. On the other hand, Eternal is seen as being in a stronger position because of its larger scale, higher advertising revenue, and better ability to recover costs from a more premium and less price-sensitive customer base.
The report said that in FY27, Eternal and Swiggy are expected to handle about 2.7 billion and 1.4 billion orders respectively across food delivery and quick commerce. According to the report, this extra cost is likely to be shared partly by higher customer charges, partly absorbed by the platforms, and partly seen as pressure on delivery partner earnings.
