Swiggy, Eternal shares tank as LPG crisis hits restaurants
What's the story
The shares of Eternal (Zomato's parent company) and Swiggy, two major players in the food delivery and quick commerce sectors, have witnessed a decline of over 4% today. The drop comes as a result of an ongoing commercial LPG shortage that has disrupted restaurant operations across India. The crisis stems from the US-Iran war in West Asia, which has affected gas supplies.
Operational challenges
Qatar Energy has declared force majeure
Qatar Energy, one of the world's largest gas producers, has declared a Force Majeure due to the ongoing crisis. This has affected its downstream clients and caused a ripple effect across various industries. As a result, restaurants across India have either reduced their menu offerings or shut down temporarily until commercial LPG supplies stabilize.
Worker impact
Gig workers demand immediate relief
The gas shortage has also affected gig workers, with over 50-60% of orders on food delivery platforms being impacted. The Gig Workers Association has raised concerns over the crisis and its impact on workers' earnings. In light of this, GIPSWU has demanded that Eternal and Swiggy provide immediate relief of ₹10,000 per affected worker along with a three-month moratorium on ID deactivation and minimum daily incentives.
Market response
Swiggy's shares trading much below its IPO price
The ongoing LPG shortage crisis has taken a toll on the stock market as well. Shares of Eternal are trading 4.4% lower at ₹214 while those of Swiggy Ltd. have also witnessed a similar decline at ₹272. Notably, Swiggy's shares are trading much below their IPO price of ₹390 while Eternal is also down substantially from its recent 52-week high of ₹367.
Financial impact
Delivery partners report significant drop in daily orders
The LPG shortage has also affected the earnings of delivery partners. One such partner, Parshuram Kamble, said his daily orders have reduced from 32 to just 13-15 in the last three days. His earnings have also plummeted from ₹1,600 to around ₹600 a day due to this crisis. Another partner Lucky Ade echoed similar sentiments saying his daily orders have dropped significantly since Tuesday due to restaurant closures amid the LPG crisis.