Target: ₹455

CMP: ₹390.10

We initiate coverage on Swiggy at Outperform and prefer it to Eternal (O/P). Swiggy has been a pioneer in food delivery (FD) and quick commerce (QC) and has built its business organically. Having created categories, it has lost some ground to Eternal which has executed better and made the right acquisitions. However, Swiggy is staging a comeback.

The food delivery market in India has now largely become a duopoly with Swiggy emerging as the number two with 43 per cent gross order value (GOV) share in FY25. Over FY25-28, we expect Swiggy to outperform Eternal’s FD business on sales and EBITDA growth, helped by its quicker deliveries which Eternal has deprioritised.

We value Swiggy using SoTP and value the FD business at 35x FY27E EV/EBITDA. We value the QC business using DCF that translates into 1x FY27E EV/NOV. The FD business is EBITDA positive with minimal capex. We expect QC cash burn to reduce from here and further equity raise may not be necessary. At the current stock price, Swiggy’s QC business is getting no valuation, and we expect this to change over the next one year.

We see the FD business as relatively low risk now but will watch out for the impact that a new entrant such as Rapido will have. The other risk we see for FD is a sharper-than-expected slowdown in GOV growth.

Published on June 20, 2025