11 hours ago
Shares of Swiggy Ltd. gained as much as 9% on Wednesday after the food delivery aggregator reported better-than-expected topline growth for the September quarter.
JM Financial finds the Swiggy stock worth ₹550 per share, which suggets a further upside of 9.6% from the current market price. The brokerage firm has maintained a 'Buy' rating on Swiggy.
Notably, the Swiggy management guided to turn quick commerce break-even by Q2FY27 and become consolidated adjusted Ebitda positive by Q3FY26. "While we remain circumspect in our forecasts, laying out tough goals for itself is commendable," it said.
The brokerage has raised its Gross Order Value (GOV) target multiple for Instamart due to a sharp improvement in the business growth profile as well as contribution profitability.
JM Financial continues to believe that Swiggy, along with Zomato, is well-positioned to benefit from robust industry tailwinds for the hyperlocal delivery businesses. Post IPO, its balance sheet also remains strong with net cash of ₹8,800 crore as of September 2024.
Motilal Oswal sees upside capped on Swiggy, as it suggested a 'Neutral' rating on the stock, and a price target of ₹475. Motilal's price target indicates a 5% downside from the current levels.
"Swiggy, through its innovation DNA, has played a pivotal role in effectively inventing both food delivery and quick commerce, leading the way in these categories. However, it has seen a decline in its lead in food delivery and is currently trailing behind its key rival, Blinkit, in quick commerce — both in terms of GOV growth and profitability. While the Q-commerce race is only getting started, Swiggy’s re-rating depends on accelerating GOV growth, increasing AOVs, and improving execution in the Q-commerce business," Motilal said.
Motilal expects Swiggy's food delivery orders to grow at 12.5% annually with an AOV growth of 1.4%, leading to a GOV growth of 14.1% over FY24-37. Quick commerce is expected to grow faster, with orders increasing at 23.6% annually, AOV growth at 3.2% and GOV growth at 27.6%.
Swiggy is expected to report a profit margin of -16.1%, -3.9%, and 1.8% in FY25, FY26, and FY27, respectively. Our adjusted Ebitda remains unchanged; however, profit has been impacted by increased ESOP expenses, the brokerage said.
Nuvama Institutional Equties in its report said that Swiggy's GOV growth in food delivery and quick commerce segments were lower than Zomato's for the first half of FY25, indicating further market share loss during the last six months.
The brokerage did not rate Swiggy but said the online food delivery platform plans to more than double its active dark store area to 4 million square feet (msf) by March 2025 against 1.5 msf in March 2024 by doubling the store count and increasing the store size.
This strategic expansion is aimed at strengthening Swiggy’s market presence and meeting burgeoning consumer demand, Nuvama said.
Shares of Swiggy are currently trading 2.48% higher at ₹514.30 apiece on the NSE. The stock commands a market capitalisation of ₹1.15 lakh crore.
