Short Call | Is quick commerce turning into the Street's new darling? Swiggy, Mphasis, Waree Energies in focus

Short Call

As the market dived into a phase of correction in the past few months amid heated valuations and sharp profit booking from exuberant levels, investors had been on the lookout for new leaders to steer the next leg of the bull run. While once-beloved sectors like defence, railways, and construction took a breather, quick commerce players like Zomato and Swiggy have quietly been making their way to the front of the pack.

The buzz around quick commerce reached its peak when Swiggy, Zomato’s archrival and the industry’s second-in-command, strutted into the secondary market. Zomato, already on a bull run of its own, has surged over 60 percent in six months and earned its spot as the first new-age tech company set to join the BSE Sensex. On the other side, Swiggy revved up its own market debut with a joyride, climbing over 25 percent in under a month as investors who missed Zomato’s rally hopped on for a second chance.

Even though the quick commerce space sits in a rather early stage of its journey, market pundits are forecasting huge growth potential in this segment. CLSA predicts that the Indian quick commerce sector could expand sixfold between FY24 and FY27. And in this sprawling market, they say, there’s plenty of room at the table for multiple players to not only co-exist but thrive.
The real debate isn’t whether to bet on quick commerce but which horse to back in this fast-paced race. Either way, one thing’s clear: quick commerce is here to serve up the next big thing.

Mphasis (Rs 3,179.45, +2.4%)

Shares became the top gainer in the Nifty IT pack after HSBC upgraded the stock to 'Buy'.

Bull Case: Company's New Client Addition (NCA) engine has gained momentum. Company is enhancing its large deal team to improve its stagnant total contract value (TCV) run-rate. An unexpected recovery in mortgage volumes or discretionary spending could provide an upside, as per a JM Financial report. Industry growth is expected to rise to 6-7 percent in FY26.

Bear Case: Growth has recently been underwhelming, largely due to its significant exposure to BFSI, particularly mortgages. Potential ramp-downs in non-BFS accounts pose a significant risk. A weaker outlook for Europe and uncertainty around GenAI may limit the upside.

Swiggy (Rs 542, +1%)

CLSA initiated coverage with a bullish buy call and a target price of Rs 708.

Bull Case: "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.

Bear Case: The food delivery player is likely to lag number one player Zomato. While the quick commerce space is expected to jump 6x from FY24-27, Zomato could be a bigger beneficiary than Swiggy.

Waaree Energies (Rs 3,134, +5.5%)

Shares of the newly-listed company rose after the it bagged a new order.

Bear Case: Market watchers attributed the decline to uncertainties surrounding the future of India's renewable energy exports, particularly solar modules, following the recent election of Donald Trump as US President. Trump’s victory speech signalled a potential rollback of renewable energy projects, which could weigh heavily on Indian exporters.

Bull Case: It is India’s leading solar PV module manufacturer and boasts an installed capacity of 12 GW across five facilities in Gujarat and Uttar Pradesh, spanning over 143 acres. Any move related to field, would directly benefit the company.

(Inputs from Zoya, Veer and Neeshita)