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Swiggy Shares Surge 14%: Here’s What Happened After ‘Buy’ Rating
Axis Capital underscored Swiggy’s position as India’s second-largest player in food delivery and quick commerce
Shares of Swiggy climbed over 14% at Rs 612.30 on Monday, December 16, after Axis Capital initiated coverage on the stock with a ‘Buy’ rating and a target price of Rs 640. The target represents a 20% upside from the stock’s last closing price of Rs 532.35. The brokerage highlighted a 27% valuation discount to rival Zomato, calling it justified given Swiggy’s growth trajectory and market position.
India’s Second-Largest Food Delivery Platform
This positive outlook triggered a sharp rally in the stock, pushing it to a fresh all-time high.
Axis Capital underscored Swiggy’s position as India’s second-largest player in food delivery and quick commerce, noting that these sectors remain underpenetrated, offering significant long-term growth opportunities.
Swiggy’s expansion strategy in the quick commerce segment, combined with improved cost management, is expected to drive revenue growth and sustain its competitive edge. The report also praised Swiggy’s strengthened leadership team for its ability to navigate challenges effectively.
Key Financials: Profitability on the Horizon
Swiggy is making strides toward profitability, with Axis Capital forecasting an adjusted EBITDA of Rs 390 crore by FY27, a remarkable turnaround from a projected loss of Rs 1,840 crore in FY24. This improvement is attributed to:
Cost optimisation across fixed and variable expenses.
Growing brand commissions and advertising revenues from its Instamart business.
Block Deal Activity Sparks Interest
In early trade, approximately 11.1 lakh Swiggy shares exchanged hands through a block deal, though the details of the parties involved remain undisclosed.
Technical Indicators Signal Bullish Momentum
Swiggy’s stock is currently trading above all major exponential moving averages (EMAs), indicating strong bullish momentum. The relative strength index (RSI), hovering near 61, suggests there’s room for further gains without entering overbought territory.
IPO Performance: A Strong Market Debut
Swiggy made its highly anticipated market debut on November 13, 2024, with shares listed at Rs 412 on the BSE, reflecting a 5.6% premium to its IPO price of Rs 390. On the NSE, the stock opened at Rs 420, delivering a 7.6% premium.
Outlook: Long Growth Runway
With the food delivery and quick commerce markets still at an early stage of penetration, Swiggy’s growth story remains compelling. Backed by strategic innovation, cost efficiency, and a robust market position, analysts believe Swiggy is well-poised to deliver sustainable long-term value to shareholders.
