Shares of Swiggy Ltd. surged in early trade on Monday as Axis Capital initiated coverage with a 'buy' call, bullish on the company's headroom for expansion amid India's burgeoning food delivery businesses.
The brokerage views Swiggy as a close second to Zomato, and is positive on aggressive expansion of Instamart's dark store network. Importantly, Swiggy's profitability metrics are showing signs of improvement, said Axis, adding that the company is forecast to achieve an adjusted Ebitda of Rs 390 crore in fiscal 2027, a significant turnaround from the estimated loss of Rs 1,840 crore in financial year 2024.
While Zomato may currently hold a leadership edge in execution, Swiggy is restructuring its organisation to be professionally managed, leveraging the expertise of industry veterans, and Axis Capital believes this innovation-first mindset, combined with a strengthened leadership team, will help Swiggy remain a market leader in its segments.
The scrip rose as much as 3.59% to Rs 551.45 apiece, the highest level since Dec. 10, 2024. It pared gains to trade 2.85% higher at Rs 547.50 apiece, as of 10:25 a.m. This compares to a 0.31% decline in the NSE Nifty 50 Index.
It has risen 20.07% on a year-to-date basis. Total traded volume so far in the day stood at 0.9 times its 30-day average. The relative strength index was at 63.71.
Out of nine analysts tracking the company, four 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 downside of 4.5%.
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