Swiggy Stock Check: Share up 20% in one week; is it still a buy? Here’s what technical and fundamental experts suggest

Swiggy's shares have delivered impressive returns to investors since its listing on November 13, 2024. The stock has surged by 26%, rising from the IPO price of ₹390 to ₹491.70 by the close of trading on November 28.

Over the past week, the food delivery and quick commerce company saw a remarkable 20% gain, touching a record high of ₹516.95 on November 28.

Swiggy shares had debuted at ₹412 on BSE, a 5.64% premium over the issue price of ₹390, and ₹420 on NSE, a 7.7% premium. Since its listing on the NSE, the stock has risen by 17%.

With this rapid ascent, investors are now wondering whether there is still room for growth or if Swiggy’s rally has peaked. Here's a look at what technical and fundamental analysts suggest:

Technical Analysis

According to Rajesh Palviya, Senior Vice President of Technical and Derivatives Research at Axis Securities, Swiggy’s stock is exhibiting a bullish trend, forming a "rounding bottom" pattern around ₹488. The breakout, supported by high trading volumes, indicates growing investor participation and positive sentiment, said Palviya.

He believes the stock is well-positioned for further gains, with potential upside targets at ₹560, ₹585, and ₹600. He advised traders to maintain long positions while identifying ₹460-465 as the immediate support zone.

Ajit Mishra, Senior Vice President of Research at Religare Broking, echoed similar sentiments. He highlighted Swiggy’s rebound after a minor dip post-listing, accompanied by increased trading activity. Mishra suggested that the ₹470-480 range will act as a crucial support level, and advised investors to trail their stop losses higher to capitalise on the ongoing momentum.

Fundamental View

Global brokerage UBS initiated coverage on Swiggy with a "Buy" rating and a target price of ₹515 (5% upside). The brokerage is optimistic about Swiggy’s growth prospects, driven by India’s expanding online food delivery (OFD) and quick commerce (Q-com) markets. UBS expects Swiggy to achieve a 35 per cent CAGR in gross merchandise value (GMV) and a 29 per cent CAGR in revenue between FY24 and FY27.

UBS also highlighted Swiggy’s current valuation, which is at a 35 per cent discount to its primary competitor Zomato. The brokerage believes this gap will narrow as Swiggy continues to demonstrate consistent growth and operational improvements.

HDFC Securities has an "Add" rating on Swiggy with a target price of ₹430. While HDFC acknowledged Swiggy’s strong brand and market position, it also emphasised challenges related to profitability due to high operational costs. The brokerage projects Swiggy’s quick commerce segment to grow at a 76 per cent CAGR through FY27, driven by increasing order density.

It noted, “Density is destiny in quick commerce,” underscoring the importance of higher order volumes in driving profitability. 

JM Financial has a "Buy" rating with a target price of ₹470, highlighting Swiggy’s ability to leverage its duopoly position with Zomato in the food delivery market. JM Financial sees improving unit economics and operational leverage as key drivers of Swiggy’s future growth.

The brokerage also pointed out that Swiggy’s recent IPO and leadership changes at its quick commerce vertical, Instamart, could serve as catalysts for a turnaround in its fortunes.

On the flip side, Macquarie has taken a bearish stance, assigning an "Underperform" rating with a target price of ₹325. Macquarie cited challenges in achieving profitability, forecasting that Swiggy’s group EBIT will break even only by FY28. Despite a projected 23 per cent CAGR in core revenue, the brokerage remains cautious about the company’s long-term profitability, especially given the intense competition in the Indian market.

Swiggy IPO Details

Swiggy’s IPO, which was open for subscription between November 6 and November 8, raised a total of ₹11,327.43 crore. The issue comprised a fresh issuance of 11.54 crore shares worth ₹4,499 crore and an offer for sale of 17.51 crore shares valued at ₹6,828.43 crore.

Its price band was set in the range of ₹371 to ₹390 per share.

The IPO witnessed strong demand, receiving bids for 57.53 crore shares against an offer of 16 crore shares, translating to an overall subscription of 3.59 times. The Qualified Institutional Buyers (QIB) segment led the way with a subscription of 6.02 times, while retail investors subscribed 1.14 times. However, the Non-Institutional Investors (NII) category saw limited interest, with a subscription of just 0.41 times.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.