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Swiggy shares surged 6% to Rs 456 after UBS initiated coverage with a 'buy' rating, projecting a target price of Rs 515, indicating a potential 27% upside. The brokerage noted Swiggy's strong growth prospects and its narrowing margin gap with Zomato, while highlighting areas for improvement in quick commerce.
Swiggy's share price increased for the second consecutive day, rising by 6.3% to Rs 457.95 before settling at Rs 445, a 3.3% gain, amid a flat NSE Nifty 50 index. Of the six analysts covering the company, four recommend a 'buy,' one suggests a 'hold,' and one advises 'sell,' with the average 12-month price target indicating a slight downside of 0.1%.
UBS has initiated coverage on Swiggy with a 'buy' rating and a target price of Rs 515, highlighting the company's growth potential in India's online food delivery and quick commerce sectors. Despite losing market share to Zomato in 2023, Swiggy has made strategic adjustments, aligning its volume growth with industry trends while improving margins. UBS projects Swiggy's online food delivery Gross Merchandise Value to grow at a low-20% CAGR from fiscal 2024 to 2027, matching Zomato's growth trajectory.
Zepto has surpassed Swiggy Instamart to become the second-largest player in the quick commerce sector, according to a report by Motilal Oswal. Blinkit remains the market leader with a 46% share, while Zepto holds 29% and Swiggy Instamart accounts for 25%. Raamdeo Agrawal, chairman of Motilal Oswal, is an investor in both Zepto and Swiggy.
Swish, a rapid food delivery startup founded by Shah, Ujjwal Sukheja, and Saran S in May 2024, has secured $2 million from Accel and various angel investors. The company aims to compete in the burgeoning 10-minute food delivery market against Swiggy, Zomato, and Zepto, which has rapidly grown into a $5.5-billion industry in India. With Zepto Cafe already achieving an annualized revenue run rate of Rs 160 crore, Swish is poised to capitalize on the quick commerce trend.
Zomato anticipates a 30% annual growth in its food delivery business over the next five years, holding a 58% market share compared to Swiggy"s 34%. The sector, still in its early stages, is expected to benefit from increased competition and innovation, especially following Swiggy"s recent public listing valued at $12.1 billion.
Swiggy has received a Neutral rating from Motilal Oswal, which initiated coverage with a target price of Rs 475 per share. The firm noted that Swiggy"s food delivery business has achieved stable unit economics, with expectations for gradual margin improvement. Motilal Oswal highlighted Swiggy"s all-in-one app strategy as a key factor for operational efficiency and cross-utilization across services, positioning it as a strong contender in the competitive food delivery and quick commerce market, currently dominated by Zomato.
SWIGGY LIMITED
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
Swiggy shares surge as UBS initiates buy rating with growth potential
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