Shares of Swiggy surged by 5% to ₹484.50 in Wednesday's intra-day trade, marking a 12% rally over the past two days. This spike followed UBS's initiation of coverage with a "Buy" rating, citing a significant valuation discount to its competitor, Zomato. UBS has set a 12-month price target of ₹515, adding to investor confidence.
A promising investment in stocks
Swiggy's performance on the BSE has been notable since its stock market debut on November 11. Within three days, the stock price climbed 16%, recovering 20% in just four days. On November 14, Swiggy achieved a record high of ₹489.25. At 09:36 AM on Wednesday, it was trading 3.4% higher at ₹477.25, outpacing the marginal 0.08% dip in the BSE Sensex.
For those looking to invest in stocks, Swiggy offers a compelling case. Analysts highlight Swiggy's strong potential in India's burgeoning food delivery and quick commerce markets. They estimate a Gross Merchandise Value (GMV) and revenue CAGR of 35% and 29% over FY24-27, respectively, positioning Swiggy for long-term growth.
Market share and strategic moves
Although Swiggy lost market share in 2023 due to business recalibrations, the company is showing signs of stabilisation. UBS Evidence Lab's data and Swiggy's Q1FY25 results reflect this recovery. Analysts believe the current 35-40% valuation discount to Zomato offers room for narrowing as Swiggy continues to stabilise and grow.
Swiggy has also adopted aggressive strategies to bridge performance gaps with Zomato. These include increased discounts, enhanced partner engagement, and improved data support for restaurant partners. These initiatives align with Swiggy's broader aim to recover volumes and margins in its quick commerce segment.
Key takeaways
For android only