Swiggy’s stock surged nearly 5% to ₹341, reflecting investor optimism after ICICI Securities reiterated a ‘BUY’ rating on the company. The brokerage maintained its three-stage DCF-based target price of ₹740, citing improving market conditions in quick commerce and a shift toward sustainable growth strategies.
ICICI Securities’ Key Takeaways on Quick Commerce:
- Discounting trends are stabilizing: After witnessing aggressive discounts between November 2024 and January 2025, the industry has moderated item-level discounts, now focusing on cart-level incentives to drive higher order values.
- Reduced marketing expenses: Quick commerce platforms have scaled back their performance marketing spends, which could improve their EBITDA conversion in the medium term.
- Investor sentiment shifting towards sustainable growth: The recent market correction has emphasized that investors prioritize long-term profitability over high cash burn and irrational discounting.
Swiggy’s Valuation and Growth Outlook
ICICI Securities values Swiggy’s food delivery segment at ₹998 billion ($11.7 billion), while its quick commerce business is estimated at ₹428 billion ($5 billion). The company also holds a cash balance of ₹90 billion ($1.1 billion), supporting future expansion.
Comparative Valuation with Zomato
- ICICI Securities also reiterated a ‘BUY’ on Zomato, setting a target price of ₹310.
- Zomato’s food delivery segment is valued at ₹1.6 trillion ($19.6 billion), while quick commerce is pegged at ₹966 billion ($11.4 billion).
- Zomato maintains a higher cash balance of ₹180 billion ($2.1 billion).
Key Risks Highlighted
Despite the positive outlook, ICICI Securities flagged potential risks, including:
- A slowdown in discretionary spending, impacting demand.
- External market disruptions, which could affect business operations and growth plans.
Swiggy’s strong performance reflects growing investor confidence in its long-term potential, despite near-term uncertainties in the quick commerce space.
