Swiggy’s stock price reached a historic peak on December 16, marking a significant milestone in its journey on the Indian stock market. This surge was largely driven by the release of a positive report from Axis Capital, a well-regarded domestic brokerage firm, which initiated coverage on the food delivery and quick-commerce (q-com) platform with an optimistic outlook. The brokerage analysts assigned a "BUY" rating to Swiggy’s stock, projecting a 20% upside potential from its current level, setting a target price of Rs 640 per share. This favorable recommendation sparked a rally in the stock price during the trading session on Monday, which saw shares touch an intraday high of Rs 612.40 on the NSE. This represented a notable 15.03% rise from the previous day’s close. By the end of the session, the stock had settled at Rs 594 per share, reflecting an 11.58% gain for the day, and pushing Swiggy’s market capitalisation to Rs 1,32,963.77 crore.
The day’s trading activity was robust, with a total of 4.81 crore shares being exchanged, leading to a turnover of Rs 2,757.07 crore on the NSE. This marked the second consecutive day of gains for Swiggy, further solidifying its position as one of the top performers in the Indian stock market. The growth in its stock price comes on the back of increasing investor confidence in the company's future prospects, particularly driven by its aggressive expansion into new sectors such as quick commerce and its ongoing efforts to boost efficiency in its operations.
Axis Capital’s report on Swiggy emphasized the company’s strong market positioning, describing it as India’s second-largest player in the highly competitive food delivery and q-com space. The brokerage pointed out that Swiggy’s long-term growth is supported by its strategic plans, particularly in the rapidly growing quick-commerce sector. The analysts also praised the company's focus on improving its cost-efficiency, expanding its network, and enhancing its service offerings. The growth potential within the duopoly of the Indian food delivery market, where Swiggy competes directly with Zomato, was another key factor contributing to the positive sentiment surrounding the stock. The strong demand in this sector, along with the possibility of margin improvements in the future, were also noted as key drivers of the company’s prospects.
One of the significant elements of Swiggy’s growth strategy, as highlighted by Axis Capital, is its transition from a founder-led company to a more professionally managed one. This shift is seen as a crucial factor in strengthening Swiggy’s competitive edge in the market. The company’s management, under this new leadership structure, has been focusing on ambitious expansion strategies, particularly in the quick-commerce segment, which has been experiencing rapid growth due to increasing demand for faster deliveries.
However, the report from Axis Capital also identified potential risks that investors should be aware of. A slowdown in consumption could negatively affect the food delivery business, as consumers might cut back on spending, thereby reducing the volume of orders placed through Swiggy’s platform. Additionally, the quick-commerce space is becoming increasingly competitive, with several new entrants entering the market, which could potentially disrupt Swiggy’s market share. The analysts also warned that if the growth of the Q-com segment, a key area for Swiggy’s expansion, does not meet expectations, it could impact the company’s overall profitability and market valuation.
Swiggy's stock performance is also a result of the company’s successful initial public offering (IPO) in November. The company’s shares debuted on the market on November 13, listing at a 7.69% premium to its IPO price. The stock opened at Rs 420 per share on the NSE, compared to the IPO price of Rs 390. The IPO was a significant success, raising Rs 11,327 crore, with the offer being fully subscribed, and receiving a subscription rate of 3.59 times. This successful debut, along with the ongoing positive outlook from market analysts, has helped bolster Swiggy’s position in the stock market, attracting attention from both retail and institutional investors.
In the wake of its successful IPO and subsequent stock rally, Swiggy continues to expand its footprint in both the food delivery and quick-commerce sectors. Its efforts to innovate and expand in these areas, while maintaining cost efficiency and improving its service offerings, position the company well for continued growth in the coming years. Despite the potential risks highlighted by Axis Capital, the company’s overall market positioning, growth prospects, and the expanding quick-commerce space contribute to its optimistic outlook. With strong backing from analysts and investors alike, Swiggy’s future on the Indian stock market looks promising, making it one of the most closely watched companies in the sector.
