Swiggy's strategy of optimizing its existing infrastructure while selectively adding new dark stores to strengthen coverage positions it well for steady growth and contribution margin expansion in the coming quarters.
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Motilal Oswal Report
We believe Swiggy Ltd. is entering a phase of profitability, supported by operating discipline and improving network efficiency. The combination of steady food delivery growth, rising Instamart annual order value, and easing fixed-cost drag enhances the visibility of positive unit economics. Steady improvements in AOV, dark store throughput, and take rates could lead to a material re-rating in profitability, prompting a more constructive stance on the stock.
We value the food delivery business at 35 times FY27E adjusted Ebitda and quick commerce using DCF.
We have brought forward our profitability assumptions for Instamart. We maintain Buy on Swiggy with a target price of Rs 550, implying a potential upside of 26%.
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