Swiggy Shares Extend Decline Amid Sector Worries, Fall Below IPO Price

Swiggy Ltd's shares on Tuesday extended their fall to drop below the IPO price of Rs 390 per share for the first time. The drop comes amid broader market concerns affecting the food delivery sector.

The decline in the shares began after Zomato Ltd. announced its third-quarter result. Zomato's unexpected slowdown in its food delivery business in Q3 triggered a wave of investor caution, with brokerages downgrading Zomato’s stock and slashing target prices. This seems to have weighed heavily on Swiggy's shares, with investor sentiment across the sector becoming more cautious.

The stock has declined in five out of last seven sessions. During these sessions the stock declined 15.5%. In the last week the stock fell 6.29%, while it fell 9.73% on Monday.

Last week Incred initiated coverage on India's e-commerce food technology industry with a positive view. It has an 'add' rating on Swiggy and Zomato.

There's large opportunity and food delivery profitability to support expansion in quick commerce, it said. It also sees long runway for monthly target users.

The brokerage has a target price of Rs 270 per share for Zomato, and Rs 540 for Swiggy.

The scrip fell as much as 5.12% to Rs 389.50 apiece to touch fresh low. It later pared losses to trade 1.37% lower at Rs 404.45 apiece, as of 12:53 p.m. This compares to a 0.87% advance in the NSE Nifty 50 Index.

It has fallen 11.30% since its listing. The relative strength index was at 32.

Out of 15 analysts tracking the company, 10 maintain a 'buy' rating, two recommend a 'hold,' and three suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 45.8%.