Bernstein initiates coverage on Swiggy with outperform rating; sees potential gains of over 29%

Shares of food services aggregator and Quick Commerce (QC) player surged up to 6 per cent at the day's high to Rs 520.70 in Thursday's session (January 9) after global brokerage Bernstein initiated coverage on the stock with an 'outperform' rating. The target price on the stock is pegged at Rs 635, implying potential gains of over 29 per cent considering the last close of Rs 490.65 per share on the BSE. In the previous session, the stock settled lower by nearly 4 per cent.

The brokerage is of the view that the current duopoly structure in the food delivery business is likely to sustain. Furthermore, as per the brokerage the stock is trading at reasonable valuations and has the potential to re-rate.

Bernstein remarked that Swiggy forayed into the food delivery business in 2014 and later expanded into Quick Commerce. And now, Swiggy is the country's second-largest hyperlocal platform after Zomato.

As per the global brokerage, Swiggy will be among the winners in India’s convenience economy, which currently has a penetration of just 8 per cent and a total addressable market (TAM) of $70 billion. Moreover, Bernstein held that the company is likely to draw benefit from a shift to super-fast delivery models.

The brokerage projects food delivery gross order value (GOV) to grow at 21 per cent between FY25-27.

Swiggy Q2 results

In the September quarter, the company reported a net loss of Rs 625.53 crore as against net loss of Rs 657.01 crore during the previous quarter ended September 2023. Sales rose 30.33 per cent to Rs 3601.45 crore in the quarter ended September 2024 as against Rs 2763.33 crore during the previous quarter ended September 2023.

Swiggy share price performance

The stock of Swiggy entered the listed space on November 13, 2024 and since its listing, the stock as against the issue price of Rs 390 has zoomed nearly 26 per cent.

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