Swiggy Gets ‘Buy’ Rating As Citi Initiates Coverage Pratiksha Thayil NDTV Profit

Citi has initiated coverage on Swiggy with a ‘buy’ rating and a target price of Rs 480, citing significant improvements in the company’s execution across both food delivery and quick commerce in financial year 2025. This comes amid intense competition, particularly in the highly competitive quick commerce segment, where the total addressable market is growing, due to its potential in urban grocery and retail.

Despite fierce competition, Swiggy’s strong platform, innovative strategies, and first-mover advantage position it well for long-term growth in both segments, the brokerage said. It sees potential upside from Swiggy’s disciplined execution and anticipates profitability will follow in the medium term, making it a compelling investment opportunity.

“We believe Swiggy is now in a ‘fast follow’ mode in QC, in addition to its sustained ‘innovation’ bona fides,” Citi said in its note on Tuesday.

Swiggy’s growth outlook remains strong, driven by innovations such as 15-minute deliveries, cloud kitchens, and deepening penetration into India’s e-commerce user base, the brokerage said in its note on Tuesday. The brokerage expects the focus on market share to be consistent through 2025 and profitability to follow in 2026.

In quick commerce, Swiggy plans to expand its dark store footprint significantly. Citi expects the quick commerce market to grow at a compound annual growth rate of 73%, reaching $26 billion by financial year 2028.

In terms of product development, Swiggy has accelerated innovations like 10-minute food delivery (Bolt) and standalone apps for quick commerce (Instamart) and quick-service food (Snacc). Despite some catch-up with Zomato Ltd., Swiggy’s strategy to carve out quick commerce as a separate app could attract a wider audience and lower customer acquisition costs. Swiggy’s approach to hyperlocal commerce positions it well for future expansion, Citi said.

While Swiggy faces risks, such as potential market-share loss and regulatory concerns, Citi is optimistic about Swiggy’s future, viewing its market positioning in quick commerce and food delivery as advantageous. The brokerage expects a favourable risk-reward profile.

. Read more on Markets by NDTV Profit.Swiggy’s growth outlook remains strong, driven by innovations such as 15-minute deliveries, cloud kitchens, and deepening penetration into India’s e-commerce user base, Citi said.  Read MoreMarkets, Business, Notifications 

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