Will Swiggy return better? The brokerage said Swiggy is well positioned for growth, currently trading at a 35% discount to Zomato.
Shares of Swiggy Ltd, a major player in food delivery and quick commerce, rose 6 percent in morning trade on November 26 to Rs. 456, following initiation of coverage by UBS with ‘Buy’ rating. The brokerage highlighted Swiggy’s strong growth prospects and added Rs. 515, indicating a potential upside of around 27 percent from current levels. UBS pointed out that Swiggy is well positioned for growth, currently trading at a 35 percent discount to Zomato.
On BSE earlier Rs. 431.25 as against a close of Rs. 6.2 percent increase to Rs. 458, making the company’s market capitalization Rs. 1 lakh crore was done. A total of 4.96 lakh shares changed hands, resulting in Rs. 22.11 crore turnover.
UBS noted that Swiggy is closing the gap with Zomato in terms of margins and scale in the online food delivery (OFD) segment. In the quick commerce (q-com) space, while Swiggy has shown promising progress, there are still areas that need improvement. The global brokerage remains optimistic about Swiggy’s growth potential in a growing market.
In contrast, Macquarie has a more cautious view on Swiggy, initiating coverage with an ‘underperform’ rating and a Rs. 325 has a target price. While the brokerage acknowledges Swiggy’s significant growth potential, it believes the road to profitability could be challenging and bumpy.
Swiggy made its market debut on November 13, listing at a premium of 5.5 percent to the issue price. Rs. 11,327 crore IPO was fully subscribed, with investors bidding 3.59 times the shares reserved for them.
Swiggy operates in the business of providing delivery services through mobile-based applications and web-enabled services, acting as a common carrier to collect, ship, distribute, transfer and deliver goods through various carriers.
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