'Swiggy’s Food Delivery Outpacing Zomato': Nuvama Initiates Bullish Coverage — Check Target Price

Swiggy may finally be shaking off its slow patch. Brokerage house Nuvama Institutional Equities says India's hyperlocal delivery heavyweight, present in both Food Delivery and Quick Commerce, is back on course after earlier strategic missteps, while initiating coverage on the stock.

The firm assigned a 'buy' call on the counter, with the 12-month target price set at Rs 510, as per its latest note.

The momentum appears to be shifting in Swiggy’s favour, notes the brokerage: its food delivery business has been outpacing Zomato for the past four quarters alongside better profitability. Its bet on quick food delivery is paying off — it now reaches more than 700 cities and contributes 10–12% of gross order value, while Zomato has scaled back the same for restaurant partners.

Global brokerage Morgan Stanley believes the $1.1 billion-plus fundraising could significantly strengthen Swiggy’s balance sheet and, at least in the near term, increase competitive intensity in the industry, though the company reiterates that its strategy remains unchanged.

The brokerages has a 20% bull case, 20% bear case and 60% base case ready for Swiggy, signalling an even probability of either upside or downside surprises in the coming quarters.

Morgan Stanley lists several factors that could lead to upside: market share gains in food delivery, stronger-than-expected traction in the quick commerce business, and further expansion of the quick commerce total addressable market.

On the downside, it flags risks such as weaker execution leading to market-share loss in both business segments, the need for sustained investments to defend quick commerce share in a highly competitive market, and potential regulatory challenges, including those relating to gig worker rules or FDI in retailing.