Swiggy shares surge nearly 6% after announcing new sports subsidiary

Swiggy shares soared nearly 6 per cent to an intraday high of Rs 514.80 on the BSE after the company announced the incorporation of its wholly-owned subsidiary, Swiggy Sports Private Limited. This strategic move signals Swiggy's expansion into the sports management and entertainment domain, creating buzz among investors.

Swiggy Sports Private Limited: A new venture
Swiggy revealed that the Ministry of Corporate Affairs approved the establishment of Swiggy Sports Private Limited, aimed at sports team ownership, talent development, and event management. The entity will also focus on acquiring broadcasting and sponsorship rights, providing career services, and promoting sports events.

The newly formed subsidiary will have a share capital of Rs 1 lakh, as per the company’s filing to the stock exchange. Swiggy's diversification efforts underline its intent to create new revenue streams beyond its core food delivery business.

Share price performance
Swiggy's stock saw fluctuations over the past month, shedding 8.53 per cent in the last 30 days. Over the last two weeks, the decline steepened to 10.15 per cent. However, the announcement of its sports subsidiary provided much-needed relief, with the stock closing 4.75 per cent higher at Rs 487.10 on Thursday.

Technical analysis
According to Trendlyne data, Swiggy shares remain below their 10-day, 20-day, and 50-day exponential moving averages (DEMA), reflecting a short-term bearish trend. However, the stock's placement above its 5-day DEMA suggests potential for near-term recovery.

Investor sentiment
Market analysts have mixed views on Swiggy’s diversification strategy. While some see the move as a potential long-term growth driver, others caution that the success of Swiggy Sports Private Limited will depend on execution and profitability in a competitive sports market.

Swiggy’s foray into sports management is a bold step that has captured the attention of investors. With the stock rebounding on this news, market participants will closely monitor the subsidiary’s progress and its impact on Swiggy’s financials.