Shares of food delivery and quick commerce major Swiggy rose 8% on June 4, a day after global brokerage Morgan Stanley initiated coverage with an “overweight” rating.
At 2:22 pm on June 4, Swiggy's shares on NSE were trading 8% higher at Rs 360.3 apiece. The 52-week low of the stock is Rs 297 and 52-week high is Rs 617. The market capitalisation of the stock is Rs 82,400 crore.
Morgan Stanley has given a target price of Rs 405 for the stock, which implies an upside of up to 12% from the current market price.
The investment thesis hinges on three key pillars: Swiggy’s strengthening performance in food delivery, the large and growing addressable market in quick commerce, and a mismatch between investor assumptions on capital outlay versus topline growth.
According to the brokerage, the food delivery landscape in India is expected to remain a two-player arena. As Swiggy tightens its execution, Morgan Stanley believes the company could close the profitability gap with its rival, Eternal, in this segment.
Quick commerce is another promising frontier. If Swiggy maintains its current share, Morgan Stanley estimates the total addressable market for this vertical could swell to $57 billion by 2030. In terms of valuation, Morgan Stanley has pegged Swiggy’s food delivery business at 25 times its FY28 adjusted EBITDA—about 5 percent lower than Eternal’s corresponding multiple. Meanwhile, the quick-commerce arm Instamart is valued at 27 times FY31 adjusted EBITDA, at a 25 percent discount to Eternal’s Blinkit.
Meanwhile, on June 4, the shares of Swiggy's peer Eternal, the parent of Zomato, were trading nearly 3% higher at Rs 244.4 apiece.
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