Swiggy Ltd. shares rallied sharply on Thursday as investors bet that the food delivery major's changing ownership structure could eventually unlock a more profitable operating model for its quick-commerce business, Instamart. The stock rose as much as 7.13% during the session to hit an intraday high of Rs 280.05. It was trading 5.18% higher at Rs 274.96, compared with its previous close of Rs 261.41.
The trigger behind the rally is Swiggy's potential transition into an Indian Owned and Controlled Company, or IOCC—a change that could have significant implications for how Instamart operates.
The IOCC Catalyst
Swiggy recently disclosed that its aggregate foreign investment, including foreign direct investment, foreign portfolio investment and other indirect foreign holdings, had fallen to 49.76% of its fully diluted equity capital as of July 6. By implication, domestic ownership has crossed 50% for the first time.
For investors, this is more than a change in the shareholding pattern. Crossing the majority domestic ownership threshold moves Swiggy closer to qualifying as an IOCC under India's foreign investment rules.
The potential prize is a fundamentally different business model for Instamart. Foreign-funded e-commerce companies in India face restrictions on holding and selling their own inventory and typically operate as marketplaces connecting buyers with third-party sellers. If Swiggy secures full IOCC status, Instamart could potentially shift towards an inventory-led model, similar to rival Blinkit.
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Why An Inventory Model Matters
A shift to direct inventory ownership could give Instamart greater control over procurement, product assortment and the supply chain. Instead of depending heavily on third-party sellers, the company could buy products directly, manage inventory across its dark-store network and potentially capture a greater share of the retail margin. Better control over procurement could also help Instamart improve availability and compete more aggressively on pricing.
Investec, which has a ‘Hold' rating and a target price of Rs 314 on Swiggy, said IOCC status could meaningfully strengthen the company's assortment-led growth strategy and bring the business closer to profitability. The brokerage pointed to Blinkit, where the inventory model helped deliver an estimated 80–100 basis points of adjusted Ebitda margin expansion over two to three quarters.
CLSA also believes a successful transition could improve supply-chain control and adjusted Ebitda margins, although it cautioned that an inventory-led structure would require more working capital.
Is 50% Domestic Ownership Enough?
Despite the market's enthusiasm, Swiggy has not yet become an IOCC. The classification requires both majority domestic ownership and domestic control. Swiggy has explicitly clarified that the fall in foreign holding does not automatically change its ownership or control status.
A previous attempt to amend the company's Articles of Association to address the control requirement secured around 72.3% shareholder support, falling short of the 75% threshold required.
CLSA believes Swiggy could attempt to pass the resolution again now that foreign shareholding has declined. JM Financial, however, remains cautious. The brokerage, which has a ‘Reduce' rating and a Rs 250 target price, does not expect the IOCC transition before the end of March 2027. That could delay Instamart's potential shift to an inventory-led model until April 2027.
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