Swiggy Rated New 'Accumulate' At Elara Securities; Price Target Set At Rs 450
Elara’s report positions Swiggy as a high-potential eCommerce player, highlighting strong execution headroom in both food delivery and quick commerce businesses
Food delivery and quick commerce heavyweight Swiggy has captured fresh attention from Elara Securities, which has initiated coverage on the company with an 'Accumulate' rating and a sum-of-the-parts-based target price Rs 450.
Elara’s report positions Swiggy as a high-potential eCommerce player, highlighting strong execution headroom in both food delivery and quick commerce businesses. The brokerage states, “Swiggy is a play on the eCommerce industry with significant execution headroom...in FD and QC.”
Swiggy’s food delivery arm is showing signs of outpacing its closest rival, Zomato, in terms of gross order value (GOV) growth. Elara emphasised that the company has “improved its profitability and recently outpaced Zomato in gross order value growth; sustaining this is key.”
While concerns around growth convergence exist, Elara believes they are “cyclical rather than structural,” projecting an 18.1% GOV CAGR for Swiggy between FY25–28 versus Zomato’s 19.0%. With user growth expected to taper off to 12% in the medium term, the report notes that GOV growth will likely be led by increased order frequency and average order value (AOV). Adjusted Ebitda of 5.0% is expected, albeit “with a lag,” and narrowing profitability gaps may drive valuation upgrades.
Swiggy’s quick commerce arm, Instamart, is taking longer to turn profitable as it battles sticky fixed costs and fierce competition. Elara observes that “the competition surge since H2FY25 paused Instamart’s progress,” though it believes key performance metrics such as AOV, take rate, and user growth are poised to improve.
The report maintains confidence in Swiggy's guidance for positive contribution margin (CM) by Q1FY27, stating that “CM drag could ease with a possible turnaround...with AOV and TR growth weighing more than pure operational efficiency.” However, it adds that “fixed cost trend remains a key watch, as progressive sign is yet to emerge – critical for adjusted Ebitda profitability.”
Swiggy is well-positioned to tap into the growing quick commerce market, which Elara projects will balloon to $33 billion by CY28, reflecting a 60% CAGR. It estimates a total addressable market (TAM) of 152 million users in densely populated cities, compared to the current 20 million.
Elara asserts that “emerging QC peers are focused on unsustainable price discounts rather than assortments...thus, Swiggy has a large growth opportunity.” It adds that “material lag in SKU breadth and throughput” among new players gives Swiggy an edge in scaling and service delivery.
The brokerage expects Swiggy to deliver a 33% sales CAGR from FY25 to FY28, supported by improving unit economics and decreasing losses in QC. It anticipates positive EBITDA and PAT by FY28, as the company bridges profitability gaps in its FD vertical and ramps up growth.
