Swiggy Shares Rise as Jefferies Initiates Coverage with 'Buy' Rating
Swiggy's stock price increased by nearly 5% after brokerage firm Jefferies launched coverage with a 'Buy' rating and set a price target implying a 60% upside.
Shares of Indian food delivery platform Swiggy saw a significant jump of nearly 5% on Monday, reaching an intraday high of ₹285.35 on the BSE. The surge followed an optimistic outlook from brokerage firm Jefferies.
Jefferies initiated coverage of Swiggy with a 'Buy' rating and established a price target of ₹435 per share. This target suggests a potential upside of approximately 60% from the stock's recent closing price. The positive rating is linked to Swiggy's shareholder approval to cap aggregate foreign ownership at 49.5%.
Analysts at Jefferies believe this move supports Swiggy's strategy to shift its quick commerce arm, Instamart, towards a first-party, inventory-led model. The brokerage estimates this transition could yield an upside of around 80 basis points in the quick commerce segment's margins.
The shareholder vote, which saw over 99.9% approval, is a crucial step for Swiggy to qualify for Indian-owned and controlled company (IOCC) status under India's foreign exchange regulations. This status was a key objective for the company after a previous proposal failed to meet the required threshold in May.
Swiggy recently reported strong financial results for the quarter ending June, with food delivery revenue growing 23% year-on-year and segment profit increasing by 48%. Its quick commerce business, Instamart, also showed robust growth, with revenue up 53% and losses narrowing.