The brokerage has maintained its “buy” rating on Swiggy with a marginal revision to its price target to ₹550 from ₹560 earlier. The stock has risen 29% in the last six months.
Swiggy’s improved execution and rising average order value in the quick commerce segment are enhancing its growth visibility. Motilal Oswal wrote in its note. With easing competitive intensity, and a pause in dark store expansion, the path to breakeven appears increasingly achievable, the brokerage added.
The food delivery aggregator and quick-commerce operator’s strategy of optimising 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, the brokerage added.
Swiggy has also doubled down on its food delivery segment propositions such as Bolt (10-minute meals), Snacc (snack meals) and 99 Store (affordable, fast prep offerings), which help Swiggy expand its monthly transacting user (MTU) base and defend its market position, as per Motilal Oswal’s note.
The 10-minute food delivery service has emerged as a clear differentiator, as per the brokerage. Eternal’s decision to exit the 10-minute food delivery space gives Swiggy a clear field to innovate and gain market share in the segment, it added.
Motilal Oswal is of the view that Swiggy’s pivot from the previous land-grab phase to a more cost-conscious operating model should drive steady margin expansion ahead. The combination of steady food delivery growth, rising Instamart average order value, and easing fixed cost drag enhances the visibility of positive unit economics, it said.
Of the 26 analysts that have coverage on the stock, 20 have a “buy” rating, two have a “hold” rating and four have a “sell” rating.
Swiggy shares were down 0.6% at ₹433.05 apiece around 1 pm on Monday. The stock has gained 29.7% in the last six months.
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