Will Swiggy Deliver Better Returns? The brokerage said that Swiggy is well-positioned for growth, currently trading at a 35% discount to Zomato
Shares of Swiggy Limited, a major player in food delivery and quick commerce, surged by 6 per cent to Rs 456 in morning trade on November 26, following the initiation of coverage by UBS with a ‘buy’ rating. The brokerage highlighted Swiggy’s strong growth prospects and set a target price of Rs 515, indicating a potential upside of nearly 27 per cent from the current levels. UBS pointed out that Swiggy is well-positioned for growth, currently trading at a 35 per cent discount to Zomato.
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The stock rose 6.2 per cent to Rs 458, compared to the previous close of Rs 431.25 on the BSE, bringing the company’s market capitalization to Rs 1 lakh crore. A total of 4.96 lakh shares changed hands, resulting in a turnover of Rs 22.11 crore on the BSE.
UBS noted that Swiggy is closing the gap with Zomato in terms of margins and scale in the online food delivery (OFD) segment. In the quick commerce (q-com) space, while Swiggy has shown promising progress, there are still areas that need improvement. The global brokerage remains optimistic about Swiggy’s growth potential in the evolving market.
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In contrast, Macquarie has a more cautious outlook on Swiggy, initiating coverage with an ‘underperform’ rating and a target price of Rs 325 per share. While the brokerage acknowledges Swiggy’s significant growth potential, it believes the path to profitability may be challenging and uneven.
Swiggy made its market debut on November 13, listing at a premium of 5.5 per cent to the issue price. The Rs 11,327 crore IPO was fully subscribed, with investors bidding 3.59 times the portion reserved for them.
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Swiggy operates in the business of providing delivery services through mobile-based applications and web-enabled services, acting as a general carrier to collect, consign, distribute, transfer, and deliver goods through various carriers.
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