ICICI Securities has issued a buy advisory on shares of online food delivery and quick commerce company Swiggy. However, the brokerage has reduced the target price to ₹400 from ₹520. This represents a potential upside of around 127% compared to the current price of ₹176.
Swiggy’s revenue rose 11.1% quarter-on-quarter to ₹7,571 crore in the second quarter. It has increased by 36.1% year-on-year. However, the company has incurred a net loss of ₹922 crore. Margins have improved in the food delivery business. Its adjusted EBITDA margin increased to 3.4% from 3.1% in the previous quarter. ICICI Securities hopes that it may improve further in the coming quarters.
Swiggy’s quick commerce business Instamart’s gross order value (GOV) rose 16.7% to ₹9,230 crore in the second quarter. It has increased by 31.4% year-on-year. The company has added 69 new stores during this period.
It had 1,240 stores in 133 cities by the end of September. However, this business is still incurring losses. Margins may improve in the next six months, the brokerage believes, reducing discounts and keeping costs under control.
ICICI Securities maintains BUY rating on Swiggy. The special thing is that the target price has been reduced from ₹520 to ₹400. Brokerages attributed this to an increase in cost of capital estimates and the number of potential shares.
It will now be important for the company to maintain growth in the food delivery business and reduce Instamart’s losses. Shares of Swiggy closed at Rs 175 in the last trading session with a sharp decline of 16.75%.
Not seeing the results as expected, investors sold heavily. The stock has crashed 38.50% in the last 6 months, while it has crashed 58.65% in 1 year. The market cap of the company has also come down to 40.42 thousand crore rupees.
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700 shares listed directly at 1,160…Investors got a whopping return of over 61% on the first day
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