Swiggy Stock Jumps 6% After Bernstein Initiates Coverage with 'Outperform

Food delivery giant Swiggy witnessed a strong rally in its share price on Thursday, January 9, 2025, as the stock climbed 6.12% to an intraday high of ₹520.70.

The surge was attributed to reports of global brokerage Bernstein initiating coverage on the stock with an ‘Outperform’ rating. Bernstein set a target price of ₹635 per share, projecting a 29.42% upside from its previous closing price of ₹490.65 on January 8, 2025.

Bernstein's Positive Outlook on Swiggy

According to reports, Bernstein highlighted that Swiggy's current valuations are reasonable, leaving significant room for re-rating. The brokerage expects Swiggy's food delivery segment to achieve a gross order value (GOV) growth rate of 21% between FY25 and FY27. They also emphasized Swiggy’s advantage as a major player in India's growing convenience economy, particularly benefiting from the shift to super-fast delivery models.

CLSA and Axis Capital Join the Optimism

In December 2024, CLSA, a Hong Kong-based brokerage, initiated coverage on Swiggy with an ‘Outperform’ rating and an even higher target price of ₹708. CLSA analysts praised Swiggy’s early entry into food delivery and quick commerce, describing the company as one of India's most innovative. They cited Swiggy’s potential in a rapidly growing total addressable market (TAM) for food delivery and quick commerce.

Domestic brokerage Axis Capital also began coverage of Swiggy with a ‘Buy’ rating and a target price of ₹640 per share, further validating investor optimism.

Swiggy Financial Performance: Key Highlights

Swiggy's financial performance in Q2FY25 demonstrated significant growth despite ongoing challenges:

• Net Loss: Narrowed marginally to ₹625.5 crore from ₹657 crore in Q2FY24. However, the loss widened compared to ₹611 crore in Q1FY25.

• Revenue: Jumped 30% YoY to ₹3,601 crore from ₹2,763.3 crore.

• Gross Order Value (GOV): Surged 30% YoY to ₹11,306 crore.

• Monthly Transacting Users (MTUs): Increased by 19.2% YoY to 17.1 million.

• Swiggy Instamart: Saw a 24% quarter-on-quarter (QoQ) GOV growth, reaching ₹3,382 crore. Orders per dark store rose 10% QoQ.

Swiggy’s Market Debut

Swiggy’s IPO debut on November 13, 2024, was met with strong enthusiasm. On the BSE, shares were listed at ₹412, a 5.6% premium over the IPO price of ₹390. On the NSE, the stock opened at ₹420, reflecting a 7.6% premium.

About Swiggy

Founded in 2014 and headquartered in Bangalore, Swiggy has evolved from being an online food delivery service to a comprehensive logistics platform. Beyond food delivery, its offerings include:

• Swiggy Instamart: A quick commerce platform delivering groceries and essentials in just 10 minutes.

• Swiggy Genie: A same-day parcel and document delivery service.

• Swiggy One: A subscription program offering exclusive benefits across services.

Operating in over 580 cities in India, Swiggy competes with major players like Zomato, Zepto, Dunzo, and FreshMenu. The company’s market capitalization stands at ₹1,12,638.67 crore, placing it in the BSE IPO category.

Industry Outlook

Swiggy is well-positioned to capitalize on India's booming quick commerce market, which is projected to grow six-fold between FY24 and FY27, according to CLSA. With strong backing from brokerages and improving financial metrics, Swiggy is on track to strengthen its foothold in the industry.

Conclusion

Swiggy's robust performance, coupled with positive endorsements from major brokerages like Bernstein, CLSA, and Axis Capital, signals a promising trajectory for the company in India's rapidly growing convenience economy.

Despite facing competition from industry peers such as Zomato and Zepto, Swiggy's continuous innovation, expanding user base, and improving financial metrics showcase its potential to solidify its position in the food delivery and quick commerce markets.

With an anticipated growth in gross order value and profitability, Swiggy remains a stock to watch in the evolving Indian market landscape. Investors and analysts alike will be closely monitoring its strategic moves and market performance in the upcoming quarters.