Bernstein initiates coverage on Swiggy with 'outperform' rating, sees 25% upside; stock jumps 3%

Swiggy shares have fallen 10 percent so far this year.

International brokerage Bernstein was among the latest to initiate coverage on recently-listed food delivery player Swiggy Ltd with an 'outperform' rating. The brokerage issued a target price of Rs 625 per share, indicating that Swiggy's stock could see a further 25 percent upside from current levels.

Bernstein noted that Swiggy was one of the winners in India's convenience economy, and will be benefits from the shift towards super-fast delivery models.

As a result, Swiggy shares surged over three percent in the morning session to quote Rs 505.8 on the NSE at 9.40 am.

Further, the brokerage believes that the duopoly structure between Zomato and Swiggy is likely to continue and sustain.

Swiggy's current valuations appear reasonable to Bernstein, which also sees a potential for Swiggy shares to re-rate. The food delivery segment's gross order value is likely to grow at 21 percent over FY25 to FY27.

Also Read | JP Morgan initiates coverage on Swiggy; sees company emerging as "an underappreciated winner"

Bernstein is among the many brokerages that have recently kickstarted coverage on Swiggy. In December 2024, JP Morgan initiated coverage on Swiggy with an 'overweight' call as well, setting a price target of Rs 730 per share.

Analysts at the brokerage were positive on the newly-listed food delivery service and see it catching up across both food delivery and quick commerce due to a renewed focus and improved execution. The note added that they expect the company to hit a critical scale across both core businesses, which will help enable faster-than-peer expansion in profitability over FY2025E-28.

Similarly, domestic brokerage Axis Capital initiated coverage on the food delivery and quick-commerce major. The analysts at the brokerage tagged a 'buy' recommendation on the shares of the company, seeing a 20 percent upside potential. It gave a share price target of Rs 640 per share.

CLSA initiated coverage on Swiggy during the month of December as well, issuing a bullish 'outperform' call, seeing a target price of Rs 708 per share.

"Swiggy has significant growth potential as it addresses a very large TAM for food delivery and quick commerce," noted CLSA. The brokerage added that it believes Swiggy's execution can improve with accelerating growth and improving profitability.

The food delivery player is likely to lag number one player Zomato, but CLSA believes this gap is visible in Swiggy's valuations and price. Over FY24-27, the brokerage expect Indian quick commerce to grow 6x, with Swiggy to be one of the largest beneficiaries.