Swiggy shares increase 6% after UBS initiates coverage, analysts expect up to 26% surge

Shares of Swiggy Ltd, a leading player in food delivery and instant commerce, jumped 6 per cent to Rs 456 in morning trade on November 26, after UBS initiated coverage with a ‘buy’ rating. The brokerage highlighted Swiggy’s strong growth prospects and set a target price of Rs 515, implying a potential upside of about 27 per cent from current levels. UBS pointed out that Swiggy is well positioned for growth, currently trading at a 35 per cent discount to Zomato.
The stock rose 6.2 per cent to Rs 458 compared to its previous close of Rs 431.25 on the BSE, taking the company’s market capitalisation to Rs 1 lakh crore. A total of 4.96 lakh shares were exchanged, resulting in a turnover of Rs 22.11 crore on the BSE.
UBS noted that Swiggy is narrowing the gap with Zomato in terms of margins and scale in the online food delivery (OFD) segment. In the quick commerce (Q-Com) space, while Swiggy has shown promising progress, there are still areas that need improvement. The global brokerage is optimistic about Swiggy’s growth potential in an emerging market.
In contrast, Macquarie has a more cautious view on Swiggy, initiating coverage with an ‘underperform’ rating and a target price of Rs 325 per share. While the brokerage acknowledges Swiggy’s significant growth potential, it believes the path to profitability could be challenging and uneven.
Swiggy made its market debut on November 13, listing at a premium of 5.5 per cent to the issue price. The Rs 11,327-crore IPO was fully subscribed, with investors bidding 3.59 times more than the portion reserved for them.
Swiggy operates in the business of providing delivery services through mobile-based applications and web-enabled services, acting as a common carrier to collect, dispatch, deliver, transfer and distribute goods through various modes of transport.