Kotak initiates coverage on Swiggy with ‘buy’ rating; stock jumps 5% | Stock Market News

Kotak Institutional Equities has begun coverage on Swiggy Ltd., assigning a ‘Buy’ rating with a price target of ₹500. This target suggests a potential 15% upside from Swiggy’s closing price on Saturday.

Swiggy’s share price jumped over 5 per cent to close at ₹456.20 on Monday’s trading session. However, the stock has dropped 32 per cent from its post-listing peak of ₹617.

In its report, the brokerage firm described Swiggy as a modern, technology-driven company providing hyperlocal services, including food delivery, quick commerce (QC), and out-of-home food consumption, all integrated within a single application.

Kotak anticipates the food delivery sector to expand at a consistent annual rate of 19%, while quick commerce is expected to grow at a significantly higher rate of 63% per year between 2025 and 2028.

The brokerage believes that improved margins in the food delivery segment will drive a 62% compound annual growth rate (CAGR) in adjusted EBITDA for the segment over FY25-28E. However, investments will be required in quick commerce to enhance infrastructure and attract customers.

Kotak emphasized that Swiggy‘s unified platform approach, which consolidates various services within a single app, strengthens its ability to attract customers and drive cross-selling. However, the brokerage also pointed out potential challenges, such as rising competition from Zomato in food delivery and Blinkit in quick commerce, along with regulatory uncertainties.

Swiggy vs Zomato

Swiggy’s shares have been under pressure following Zomato’s December quarter results, where the company highlighted a slowdown in its core food delivery business.

Additionally, Zomato announced plans to accelerate investments in its quick commerce arm, Blinkit, aiming to reach its target of 2,000 dark stores a year earlier. As a result, Blinkit is expected to remain loss-making in the near term.

Swiggy has yet to confirm the date for its board meeting to disclose its December quarter results.

Among the 15 analysts covering Swiggy, 10 maintain a “buy” rating, two recommend “hold,” and three have a “sell” rating.