Swiggy Gets Outperform Rating, Target Price Of INR 635 From Bernstein

Bernstein has initiated coverage on foodtech and quick commerce major Swiggy with an ‘outperform’ rating and a target price (TP) of INR 635, as the brokerage has an optimistic outlook on both quick commerce and food delivery verticals.

The brokerage believes that Swiggy will be one of the winners in India’s “convenience economy” and benefit from the structural shift to super-fast delivery models in the fastest-growing market globally. Bernstein sees quick commerce as an attractive category with a play on the broader retail market. 

“Swiggy is one of the core beneficiaries of the shift. Growth runway remains robust with Swiggy expected to grow 90%+ CAGR in the medium term led by new categories (electronics, apparel) & Tier 2+ cities,” said analysts at Bernstein. They project Instamart to reach adjusted EBITDA breakeven by mid-FY27 and 3-4% by FY30 as scale drives operating leverage.

It is pertinent to note that while the quick commerce segment has been seeing high competitive intensity for some time, the food delivery segment is also seeing an increase in competition, with focus on quick deliveries. As a result, Swiggy recently rolled out a new app ‘SNACC’ to deliver quick bites, beverages and meals in 15 minutes.

However, analysts at Bernstein are not too worried by this. “While competitive intensity is increasing from ecommerce players (Amazon, Flipkart), we expect incumbents (Swiggy, Zomato) to hold market share (in quick commerce). Swiggy has built strong assets (dark stores, brand relationships, delivery rider network) allowing the company to remain ahead of the competition,” the brokerage highlighted.

The analysts also said in the initiation note that the duopoly structure of the food delivery market will continue, and Swiggy is expected to grow its GOV in this vertical at 21% CAGR in the FY25-27 period. 

“While Swiggy’s market share declined by 4% over the last three years, we see market share stabilising (about 42%) with better customer acquisition and innovative product launch (Bolt, Swiggy One Lite),” Bernstein said. 

The brokerage sees the adjusted EBITDA margins in Swiggy’s food delivery expanding to 4% by FY30 from 1.2% in Q2 FY25, in line with Zomato’s margin expansion.

Bernstein’s TP implies a 29.4% upside to Swiggy’s last close on the BSE. Its shares ended Wednesday’s trading session 3.6% lower at INR 490.65.

During its Q2 FY25 earnings announcement, Swiggy said that it expects its business to achieve adjusted EBITDA profitability on a consolidated level in the third quarter of FY26. On the quick commerce front, Swiggy, too, projects adjusted EBITDA break-even by the second quarter of FY27.

Meanwhile, Swiggy also expects its out of home consumption business to achieve adjusted EBITDA break-even in the current fiscal year. Bernstein analysts said in the research note that they expect this vertical to grow at a 22% CAGR between FY25 and FY30.

Swiggy’s consolidated net loss narrowed 4.78% to INR 625.53 Cr in Q2 FY25 from INR 657 Cr in the year-ago quarter. Its operating revenue jumped 30% year-on-year to INR 3,601.45 Cr during the quarter.

Two months back, UBS also initiated coverage on Swiggy with a ‘buy’ rating and TP of INR 515.

Since its listing on the bourses, in early November, Swiggy shares have gained 19% on the BSE.