JM Financial gives Swiggy its first 'buy' tag, sees 20% upside from IPO price

Swiggy shares listed with modest gains but extended uptrend to rise close to 15 percent to day's high.

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26 Aug, 2025 12:21

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Brokerage firm JM Financial initiated coverage on Swiggy after the company's $1.3 billion listing, assigning the online food aggregator its first 'buy' call as it referred to it one of India’s fastest growing consumer plays. Alongside that, JM Financial gave a price target of Rs 470 to the stock, reflecting a 20 percent upside potential from its IPO price of Rs 390.

Shares of Swiggy made a modest debut on the bourses on November 13, listing at premium of 8 percent over its IPO price. However, the stock managed to garner investor attention which propelled its shares to a high of Rs 448, reflecting gains of around 15 percent.

JM Financial analyst, Swapnil Potdukhe stated seeing “immense growth potential” in Swiggy’s Instamart rapid grocery delivery business, citing that quick commerce is essentially a bet on India’s broader consumer market. Their optimism for Swiggy's quick commerce bet--Instamart, ran high as the analyst see potential in to soon be as large as Swiggy’s flagship food delivery business.

JM Financial noted that even today, Swiggy continues to be one of the leading hyperlocal delivery platforms in the country, bettered only by rival Zomato. "Despite having ceded some space to competition, it is one of the fastest growing consumption plays with multiple levers to move towards sustainable margins," the brokerage wrote.

Also Read | Swiggy shares debut on NSE at Rs 420 apiece, nearly 8% premium over IPO price

Moreover, the brokerage also highlighted the scope of expansion in India's food delivery market, which can swell up to 20 percent in the foreseeable future. Combined with a duopoly structure of the industry, JM Financial believes Swiggy can grow closer to the market, with improving margins, aided by better control over unit economics and robust operating leverage.

JM Financial further stated that Swiggy's balance sheet turned stronger following fresh funds raised during the IPO, positioning it to better withstand competitive pressures. As a result, they believe Instamart--its quick commerce arm, is poised for exponential expansion in the medium term, despite past execution challenges. "The business model offers significant operating leverage at scale, which should help the segment become self-sustainable," the firm wrote.

In conclusion, JM Financial feels a successful IPO and leadership revamp at Instamart could just be the catalyst Swiggy needs for a successful turnaround in its fortunes.

In contrast, Macquarie initiated coverage on Swiggy with an 'underperform call, assigning it a target price of Rs 325, much lower than its IPO price. While Macquarie took note of Swiggy’s significant growth potential, it still cautioned that its path to profitability may be challenging and uneven.

The report highlighted Swiggy's opportunity to narrow the gap with competitor Zomato, but raised concerns about the quick commerce segment, calling it a complex area with uncertain prospects for sustainable profits.

Also Read | Swiggy stock rating: Macquarie initiates with bearish view, share price jumps 13% post modest listing

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.