UBS noted that Swiggy, which recently made its Dalal Street debut on November 13, is well-positioned to benefit from its improving margins and scale. Swiggy’s quick commerce business is slated for promising growth potential, catering to rising consumer demands for rapid delivery.
The brokerage highlighted that Swiggy’s valuation is currently at a 35% discount compared to its rival Zomato. UBS expects this gap to narrow as the food delivery player exhibits sustained growth. Swiggy is projected to achieve a gross merchandise value (GMV) CAGR of 35% and revenue CAGR of 29% between fiscal 2024 and 2027.
Swiggy’s food delivery segment, which accounts for 67% of its GMV, has achieved stable unit economics. The company recently broke even in adjusted EBITDA terms, posting a 0.9% margin in Q1 FY25.
UBS views Swiggy’s evolving business model, focused on online food delivery (OFD) and quick commerce (Q-com) as a strategic advantage, setting the firm for long-term growth in an expanding, but competitive Indian market. The brokerage, however, cautioned about operational inefficiencies, emphasizing the need for further improvement to fully harness its potential.
Like most other big IPOs, Swiggy too made a muted debut on Dalal Street by listing at a small premium of 8% over its issue price. Since Swiggy is currently loss-making at consolidated level and believed to be at least 2-3 years away from PAT level break-even, investors are refraining from making bold bets.Also read | Emkay cuts Nifty target to 25,000 but says earnings downgrades not alarming
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