Swiggy Stock vs Zomato Stock : Shares of Swiggy, a newly listed player in the food delivery space, are proving to be a profitable deal for those investors who had invested money in the IPO and also got allotment. Swiggy shares are witnessing a strong rise for the second consecutive day today. Today the share strengthened by more than 7 percent and reached the price of Rs 501. After brokerage house Motilal Oswal, now UBS has also given a positive review regarding the stock. Due to which this stock has remained a rocket from yesterday till today. The rise is such that it has come close to the target price of brokerage house UBS.
NTPC Green Energy’s slow entry in the market, stock listed at 3% increase compared to IPO price
stock valuation
Brokerage house UBS says our target price of Rs 515, derived from a combination of DCF and multiple based SOTP, is broadly similar to the assumptions we have for Zomato. As per our estimate, the current market price of the stock reflects FY27e EV of 1.2x to core GMV (OFD + q-com) and EV of 6.2x to core revenue (OFD + q-com + OOH) which is comparable to Zomato. It is at a discount of 38 percent and 31 percent. With signs of market share stabilization and improving unit economics, we expect this discount to narrow.
Sell Alert! Be alert about these 5 shares, weakness can come up to 24% from the current price, brokerage has given SELL and REDUCE rating.
28% stronger than IPO price
At present, the profits of those who invested in Swiggy’s IPO have also increased. This IPO was launched with an upper price band of Rs 390. Now the share is trading around Rs 500. In this context, those who invested money in IPO have got 28 percent return so far. This share was listed on BSE on 13 November 2024 at a price of Rs 412.
Other brokerage houses also positive
Brokerage house Motilal Oswal says that Swiggy’s unified platform has become essential for urban consumers, which covers everything from food delivery to grocery needs in a single app. Leveraging a unique mix of convenience, high-frequency offerings and user stickiness, Swiggy stands out in the competitive environment. While Zomato is currently the leader in the food delivery and quick commerce business, Swiggy’s all-in-one app strategy enables stronger cross-utilization across services and better operational efficiency.
Comeback IPO: These shares had broken hearts on listing, but have now become multibaggers, those who were patient got returns up to 375%
Brokerage house Motilal Oswal says Quick Commerce is a transformative opportunity, giving Swiggy a chance to redefine how Indian consumers shop for essentials and other goods. The brokerage believes that Swiggy has the potential to be among the top 3 players in this fast-growing market segment due to the demand for fast and convenient delivery services. Overall, Swiggy is well positioned to capitalize on this growth by expanding its customer base, increasing order volumes and values, and improving its unit economics and profitability.
According to brokerage house HDFC Securities, Swiggy also has a strong brand presence and strong user base. The brokerage has highlighted the company’s strong growth prospects in Quick Commerce. However, it has also said that operational constraints may affect its long-term profitability trajectory.
Buy on Dip: These 36 quality stocks are available at up to 61% discount from 1 year high, is this the right time to invest money in the market?
Zomato vs Swiggy
Brokerage house UBS says that Swiggy’s valuation is currently at a 35 percent discount compared to its peer Zomato. Swiggy is expected to achieve GMV CAGR of 35 percent and revenue CAGR of 29 percent between financial years 2024 and 2027. Swiggy’s food delivery segment, which accounts for 67 per cent of its GMV, has achieved stable unit economics. The company recently achieved breakeven in adjusted EBITDA terms, posting a margin of 0.9 per cent in Q1 FY25.
Brokerage House on Zomato
Brokerage house Morgan Stanley believes that in the bull case the share price can double from the current price in less than the next 3 years. Whereas in the base case the share can double in 5 years. At present, the brokerage has kept the target price of the share at Rs 355 for the near term.
Brokerage house Motilal says that while the company’s food delivery business is stable, Blinkit provides a generational opportunity to participate in the disruption of industries like retail, grocery and e-commerce.
Zomato: Which factors are supporting?
1. Quick commerce market may accelerate due to category expansion and wallet share gains.
2. Despite high competitive intensity in the near term, we expect Zomato to remain the market leader and capture a greater share of the industry profit pool.
3. It is expected that Zomato will maintain its 40% market share despite increasing competition.
4. The stock in the Quick Commerce business is priced at Rs 120/share, which we think is conservative.
5. Zomato’s strong balance sheet and ability to withstand competitive pressures puts it ahead of its competitors.
6. The company’s food distribution business also remains strong, based on a loyal customer base and solid operating metrics.
7. The company’s margin may remain at 2.2% till F2027 and 5.1% till F2031. Which indicates an annual profit pool of around 1 billion US dollars for this business.
(Source: Morgan Stanley)
(Disclaimer: The view or advice on the share is given by the brokerage house. These are not the personal views of Financial Express. There are risks in the market, so take expert opinion before investing.)
