The brokerage sees the Swiggy's stock trading at Rs 850 in bull-case scenario and Rs 415 in our bear-case, implying a risk reward skew of 3.8:1 to the upside.
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ICICI Securities Report
Given the increased competitive intensity in quick commerce, the path to profitability for all incumbents has been delayed. But, on the flipside, the incumbents are swiftly expanding their dark store footprint; thus, fortifying the space against new entrants and keeping their medium-term outlook well-guarded.
Alongside, Swiggy Ltd. has demonstrated its execution prowess with ‘Swiggy Bolt', a 10-minute food delivery offering, and ‘Swiggy BLCK', a premium loyalty offering.
We opine, these should help Swiggy increase market share in food delivery in the near term – evidenced by the incremental mind share noted in our survey data. Additionally, Swiggy offers a more reasonable valuation (15-25% discount on enterprise valeu/Ebitda and EV/sales) for each business segment compared to Zomato.
We initiate coverage on Swiggy with Buy and a target price of Rs 740.
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