The share price of this recently listed stock involved in food delivery aggregation soared 6 percent on Tuesday morning after UBS initiated a buy rating indicating potential growth.
Share Price Movement
In Tuesday’s trading session, Swiggy Ltd‘s share price hit an intra-day high of Rs.457.95 per share, a 6.3 percent rise from the previous close of Rs.430.70 each. The price has since retreated to Rs.444.95 apiece. Swiggy debuted on the stock market on November 13 at Rs.412 per share, reflecting a 6 percent premium over its IPO price.
Rationale for the Rise
Global brokerage firm UBS has initiated coverage on Swiggy Ltd., a competitor to Zomato Ltd. in the food delivery sector, with a ‘Buy’ rating and a price target of Rs.515. This target suggests a potential upside of about 20 percent from Monday’s closing price.
UBS noted that Swiggy is narrowing the gap with Zomato in terms of margins and scale in the Online Food Delivery (OFD) segment. In the Quick Commerce (Q-comm) sector, while progress is being made, further improvements are required.
The brokerage forecasts Swiggy’s OFD gross merchandise value (GMV) growth for FY24-27 to align with Zomato’s, with a low-20s percentage increase. They expect adjusted EBITDA margins to reach 2.8 percent by FY27. The brokerage highlights key areas such as increasing fundraising activities and the growing competition in the quick commerce space.
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Financials
In its latest filing, Swiggy Ltd reported a 35 percent rise in revenue for Q1 FY25, reaching Rs.3,222 crore, compared to Rs.2,390 crore in Q1 FY24. However, the company’s net loss increased to Rs.611 crore, up from Rs.564 crore in Q1 FY24.
Shareholding Pattern
As per the shareholding pattern for November 2024, Foreign Institutional Investors (FII) hold a 5.22 percent stake in Swiggy, Domestic Institutional Investors (DII) own 8.11 percent, while Retail investors hold 86.66 percent.
About the company
Swiggy is an Indian online food delivery and ordering platform, that was founded in 2014 and is based in Bangalore. The company operates in more than 580 cities across India, offering food delivery services as well as quick commerce through Swiggy Instamart and same-day package deliveries via Swiggy Genie.
In addition to food, Swiggy has expanded its services to include grocery deliveries and introduced cloud kitchens to assist restaurant partners.
Written by – Siddesh S Raskar
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