Bernstein has recently begun covering Swiggy, setting a target price of Rs 635. As a result, the stock has seen a 6% increase.
Swiggy’s stock surged by 6.1% on Thursday, reaching Rs 520.70 on the BSE, following a positive coverage initiation by global brokerage firm Bernstein. The firm gave Swiggy an ‘outperform’ rating with a target price of Rs 635 per share, indicating a potential 22% increase from its current levels.
Bernstein highlighted Swiggy’s significant role in India’s food delivery market since 2014 and its expansion into quick commerce. Currently, Swiggy stands as the second-largest hyperlocal platform in India, just behind Zomato.
The brokerage firm emphasized Swiggy’s strategic position to benefit from the growing trend towards super-fast delivery models in India’s convenience economy, which has an 8% penetration rate and a total addressable market of $70 billion. Bernstein forecasts a compound annual growth rate (CAGR) of over 50% for this segment.
Despite closing 3.44% lower at Rs 491.75 on Wednesday, Swiggy’s shares have seen a 7.6% increase since their listing on November 13. The stock has been trading at a discount compared to Zomato, reflecting concerns about quick commerce success and potential market share loss in food delivery.
Bernstein commended Swiggy’s strong assets and ability to maintain a competitive edge amidst growing sector competition. The firm expects the duopoly between Swiggy and Zomato to persist, with both companies retaining their market shares.
Their focus on quick commerce is particularly promising, with a projected 90% CAGR in the medium term. In response to Zomato’s 15-minute delivery model, they recently introduced Snacc, a 10-minute food delivery service, and Pyng, a professional services marketplace.
Bernstein’s report is in line with the positive coverage provided by brokerage firms JPMorgan and Axis Capital. JPMorgan set the target price at Rs 730, while Axis Capital set it at Rs 640. JPMorgan highlighted Swiggy’s potential to enhance its presence in the food delivery and quick commerce sectors through strategic execution, labeling it as an “underappreciated winner” in India’s local services ecosystem.
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