Swiggy- the food delivery services major has recently released its Q2 earnings-its first since entering the listed space. For the September quarter, the company's loss narrowed year-on-year to Rs 625.5 crore as against Rs 657 crore in the same period last year.

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So, as Swiggy and Zomato are two emerging players in the segment with Swiggy also competing with its rival at full vigour. Here's what you should be buying.

Global brokerage HSBC has initiated its coverage on Swiggy post the company's Q2 performance giving it a 'hold' rating. The target for the stock is pegged at Rs 550- implying gains of just nearly 2 per cent from the last close.

Also Read: Swiggy Q2 results: Loss narrows to Rs 625 crore, revenue surges 30% YoY

The stock amid improving sentiment on the D-Street has been moving higher for the past seven sessions and during the time has gained as much as 15 per cent.

According to HSBC, the company is a pioneer In both food delivery & quick commerce. Nonetheless, it has not been able to sustain its early-mover advantage.

Further, the brokerage added that catching up on growth and profitability could be challenging amid severe competition. 

However, it cites better than expected execution and valuation catch-up to be the key upside risks. 

Over the FY24-27 period, the brokerage expects the company's food delivery business to growth at CAGR of 16 per cent, while quick commerce (QC)- Instamart business will log 65 per cent growth.  Do not forecast EBITDA breakeven for overall business before FY28, the brokerage added.

Swiggy gains since listing on November 13

Since listing on November 13, the stock has gained as much as 39 per cent as against its IPO issue price of Rs 390.