Swiggy Gets Strong 'Buy' As JPMorgan Initiates Rating With Eye On Instamart, Food Delivery Strengths

JPMorgan began covering Swiggy Ltd. with an 'Overweight' rating with a target price of Rs 730, which implied a 27% upside from Wednesday's closing price. The investment bank sees several positive catalysts for the company over the next six quarters. Swiggy may also witness rising momentum on the year and catch up on profit vs Zomato Ltd. in both the food delivery and quick commerce businesses.

Swiggy may also reach critical scale across both core businesses, which will aid its faster than peer expansion in profitability over financial year 2025 and 2028. "Swiggy trades at a 1.8x Enterprise Value/Gross Order Value and 6.1x EV/revenue on FY26E, a 32-42% discount to Zomato that appears overly pessimistic to us," JPMorgan said in a note on Thursday.

JPMorgan also called Swiggy an underappreciated winner in the local Indian ecosystem. The company is expected it to be the most profitable quick commerce platform after Blinkit. It is expected it to grow GOV by a 92% CAGR over FY24-27 and break even on an Ebitda basis.

The company has been able to restrict market share losses with combination of subscription aggression, focused execution, and innovation in the food delivery market in India. Swiggy is likely to be able to hold onto market share and expand profits sharply from recovering unit economics from platform fees and modernisation, according to JPMorgan.

Rising competitive risks in the quick commerce space from emerging e–commerce player like Amazon, Flipkart, and price aggression from Zepto and Blinkit may pose risks to value creation, JPMorgan said. Any share losses in markets to Zomato in both the food delivery and quick commerce because of poor execution are going to be key risks to estimates.

"Finally, any regulatory intervention on QC seller structures and rider payouts are risks to our thesis."