Swiggy Ltd.'s share price climbed for the second consecutive session today, adding 7% over Friday's closing price, as UBS initiated coverage on the stock with a 'buy' rating and a target price implying 19.6% upside.
According to the brokerage, Swiggy's current market price reflects a 35-40% discount to Zomato and this gap is expected to narrow as the company demonstrates sustained growth. "Swiggy is projected to achieve a gross merchandise value CAGR of 35% and revenue CAGR of 29% between fiscal 2024 and 2027," it said.
Since its closing on the listing day on 13th of this month, Swiggy's share price has fallen 2.6% while that of its competitor Zomato has gained 6.4%.
After losing market share to Zomato in 2023 due to slower expansion in Tier 2 cities and the success of Zomato's subscription program, Swiggy has made strategic adjustments. UBS Evidence Lab data shows Swiggy's volume growth in 2024 is now in line with industry trends.
The company has also achieved this recovery without compromising margins, which have continued to improve, with adjusted Ebitda margin projected to reach 2.8% by fiscal 2027.
On Tuesday, Swiggy share price rose as much as 6.3% to Rs 457.95 apiece. It pared gains to trade 3.3% higher at Rs 445 apiece, as of 10:58 a.m. This compares to a flat NSE Nifty 50 index.
Total traded volume so far in the day stood at 0.4 times its 30-day average. The relative strength index was at 55.
Out of the six analysts tracking the company, four maintain a 'buy' rating, one recommends a 'hold,' and one suggests 'sell,' according to Bloomberg data. The average 12-month consensus price target implies a downside of 0.1%.
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