Stories
UBS Predicts $10 Billion Profit Pool in Booming India Internet Economy
- •India's online market is projected to cross $200 billion within five years, growing from the current $80 billion to $85 billion.
- •Quick commerce is expanding at 40% to 45%, growing twice as fast as the overall e-commerce market.
- •Growth is increasingly driven by tier-2 cities, helping platforms scale and improve profitability visibility.
- •UBS estimates a potential $6 billion to $10 billion profit pool based on mature market margins of 3% to 5%.
Key Questions Answered
According to UBS, India's online market could exceed $200 billion within five years, potentially creating a $6 billion to $10 billion profit pool assuming steady-state margins of 3% to 5%. This estimate excludes food delivery, which is valued at an additional $12 billion to $15 billion.
Growth is being driven by e-commerce, quick commerce, and value commerce expanding beyond top cities into tier-2 locations. Quick commerce accounts for 20% to 25% of the total online market and is growing at 40% to 45%, while value commerce grows around 30% to 35%.
UBS highlights Eternal as its top sector pick with a 'buy' rating and a price target of ₹305, alongside Meesho with a 'buy' rating and a target of ₹210. These choices reflect a preference for companies demonstrating resilience and clear value propositions despite market volatility.
