Motilal Oswal's research report on Swiggy
We upgraded Swiggy to BUY (see our report dated, 4th September, Internet: A buffet of tailwinds), reflecting an inflection in growth of the food delivery (FD) business and improved unit economics in the quick commerce (QC) business. In this note, we highlight the evolving narrative around Swiggy. The company’s improved execution and rising average order value (AOV) in QC are enhancing its growth visibility. With easing competitive intensity and a pause in dark store expansion, the path to breakeven appears increasingly achievable. Swiggy’s strategy of optimizing its existing infrastructure while selectively adding new dark stores to strengthen coverage positions it well for steady growth and contribution margin expansion in the coming quarters.
Outlook
We value the FD business at 35x FY27E adjusted EBITDA and QC using DCF. We have brought forward our profitability assumptions for Instamart (see our report dated 4th September, Internet: A buffet of tailwinds). We maintain BUY on Swiggy with a TP of INR550, implying a potential upside of 26%.
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