Brokerage company Motilal Oswal has initiated coverage on Swiggy with a ‘neutral’ rating, predicting a 15% upside potential from its current stock price. This comes days after the food tech giant’s $1.3 billion public offering.
Swiggy loses market leader position to Zomato, Zepto – Motilal Oswal
According to INC42, analysts at Motilal Oswal noted that Swiggy has lost its market leader position to Zomato and Zepto, but its unified app approach will give it an edge in the competitive food delivery and quick commerce segments.
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“Swiggy stands out as India’s only unified app that seamlessly supports urban users’ food-related needs, from ordering in and dining out to cooking at home—all through a single platform,” the brokerage said.
However, Swiggy’s integrated app offering maximises cross-utilization of its services and promotes user stickiness, unlike Zomato’s multi-app approach. The brokerage expects Swiggy’s food delivery business to achieve stable unit economics, with margins improving from 6.4% to 9% by FY28.
Swiggy to grow 22.6% in GOV
Further, Motilal Oswal expects Swiggy’s food delivery business will grow 22.6%, 27.9%, and 19.4% in gross order value (GOV) over FY25, FY26, and FY27, respectively. The quick commerce segment’s GOV is expected to grow 64.5%, 67.1%, and 56% during the same periods.
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The brokerage also noted that Swiggy’s unified platform should allow it to extract higher average order volumes (AOV) for its Instamart business and monetize the platform better for ad-sales and other value-added services.
“Swiggy’s unified platform should allow it to mine its customers better and extract higher AOVs for its Instamart business. Further, it needs to monetise this platform better for ad-sales and other value-added services for FMCG brands,” the brokerage further stated.
This report follows JM Financial‘s initiation of coverage on Swiggy with a ‘buy’ rating and a price target of INR 470, citing its rapid growth and potential for sustainable margins. Swiggy made its stock market debut on November 13, listing at an 8% premium on the NSE.
