Global brokerage firm UBS has initiated coverage on foodtech major Swiggy with a ‘Buy’ rating and a price target of INR 515 for the upcoming 12 months. UBS believes there is “plenty of room at the table” for Swiggy to benefit from the rapid growth in India’s food delivery and quick commerce markets.
| Table of Contents |
|---|
| Swiggy’s Market Position |
| Financial Projections |
| Other Brokerage Ratings |
| Market Response |
| Conclusion |
| FAQ |
Swiggy’s Market Position
Swiggy has shown signs of stabilizing market share, especially in the food delivery vertical. Despite experiencing a loss in market share within the quick commerce vertical, Swiggy has made strategic infrastructure changes to align itself with evolving trends. This adaptability has resulted in impressive performance metrics, particularly for Swiggy Instamart, where order count surged by 41% in Q1 FY25, and the average order value increased by 10%.
Financial Projections
UBS forecasts that Swiggy’s quick commerce vertical will achieve adjusted EBITDA breakeven by FY29. Notably, Swiggy’s current stock price is trading at a 35-40% discount compared to its competitor Zomato. The brokerage anticipates that this valuation gap will narrow as Swiggy continues to stabilize its market share, enhancing investor confidence and potentially leading to a stock price rebound.
Other Brokerage Ratings
UBS is not the only brokerage to express optimism regarding Swiggy. JM Financial has also initiated coverage with a ‘Buy’ rating, highlighting Swiggy’s growth prospects. Conversely, Motilal Oswal rated Swiggy as ‘neutral,’ but set a price target of INR 475, indicating a cautious approach amid the competitive landscape.
Market Response
UBS’s bullish stance adds to the positive sentiment surrounding Swiggy following its recent listing earlier this month. As more analysts begin to provide optimistic assessments, it is expected that Swiggy’s demonstrated market share stabilization will drive its future performance. Investor confidence is likely to strengthen further, promoting a favorable market environment for foodtech firms in India.
Conclusion
UBS joins other brokerage firms in recognizing Swiggy’s potential in the foodtech sector. Swiggy’s strategic maneuvers, coupled with a positive outlook from financial analysts, position it favorably for growth in the months ahead. As India’s food delivery and quick commerce markets continue to expand, Swiggy appears well-positioned to capitalize on emerging opportunities and adapt to market demands.
FAQ
Q: What is UBS’s price target for Swiggy?
A: UBS has set a price target of INR 515 for Swiggy over the next 12 months.
Q: How has Swiggy’s market share changed?
A: Swiggy has stabilized its market share in the food delivery vertical but faced challenges in the quick commerce sector.
Q: What are the recent performance metrics for Swiggy Instamart?
A: Swiggy Instamart experienced a 41% increase in order count in Q1 FY25 and a 10% growth in average order value.
