IIFL Capital initiated coverage with a “buy” rating on the stock with a price target of ₹535 per share. The stock ended the previous session at ₹365.4 apiece.
The brokerage expects Swiggy’s revenue to grow at a Compounded Annual Growth Rate (CAGR) of 28% over financial year 2025-2028 and turn positive on an Earnings Before Interest, Tax, Depreciation And Amortisation (EBITDA) level by financial year 2027 and on a Profit After Tax (PAT) basis by financial year 2028.
IIFL Capital said Swiggy is potentially seven and eight quarters behind Eternal in food delivery and three and eight quarters behind in quick commerce on gross order value (GOV) and EBITDA margin, respectively.
“We see this as a function of power execution in the past, rather than a competitive disadvantage,” the brokerage said.
It has valued Swiggy’s food delivery business at $8.5 billion compared to Eternal’s $14.4 billion.
With Swiggy’s market capitalisation at $10.3 billion, its quick commerce business, including other verticals, implies a value of $1.8 billion, trading at a deep discount of 88% to Blinkit despite being only 50% smaller, IIFL Capital said.
“Hence, we believe successful execution in quick commerce could provide asymmetric upside in the stock, with easing competition in the segment and market share gains in food delivery as key catalysts,” the brokerage added.
Duopoly in food delivery, oligopoly in quick commerce
IIFL Capital said it expects Swiggy’s food delivery to reach $20 billion GOV by financial year 2030 and remain in duopoly business with no new major players emerging.
Within quick commerce, the brokerage expects Swiggy to become an oligopoly with Blinkit and Swiggy Instamart as the two key players. It said competitive intensity may remain elevated for the next few quarters as incumbent e-tailers try to regain their share.
The brokerage is of the view that quick commerce is expected to grow at over 50% CAGR over financial year 2025-2028, and reach $40 billion by financial year 2030, with Swiggy maintaining its top three position.
Structural growth story but execution is key
While its duopolistic position in food delivery is cemented, jury is still out on leadership in the quick commerce segment, the brokerage said. “We expect Swiggy to grow food delivery at 18% CAGR and reach 20%, adjusting EBITDA margins by FY28. However, Instamart could grow by over four times by FY28 and achieve EBTIDA breakeven by FY29 only,” it added.
IIFL has cited competition and regulation as the key risks.
Of the 22 analysts that have coverage on the stock, 16 have a “buy” rating and three have “hold” and “sell” ratings, each.
Swiggy shares gained 5.4% to hit an intraday high of ₹385 apiece. The stock was trading 3.8% up at ₹379.25 apiece at 11.40 am. It has gained 17% in the past month but has declined 30.2% this year, so far.
