BUY 

CMP: INR 506 Target Price: INR 740  46% ICICI Securities Limited is the author and distributor of this report

09 January 2025 India | Equity Research | Initiating Coverage

Swiggy
Internet

Bon apétit: High-quality franchise; relatively reasonable valuation

Given the increased competitive intensity in quick commerce, the path to profitability for all incumbents has been
delayed. But, on the flipside, the incumbents are swiftly expanding their dark store footprint; thus, fortifying the space
against new entrants and keeping their medium-term outlook well-guarded. Alongside, Swiggy has demonstrated its
execution prowess with ‘Swiggy Bolt’, a 10-minute food delivery offering, and ‘Swiggy BLCK’, a premium loyalty
offering. We opine, these should help Swiggy increase market share in food delivery in the near term – evidenced by
the incremental mind share noted in our survey data (see our sector note: link). Additionally, Swiggy offers a more
reasonable valuation (15-25% discount on EV/EBITDA and EV/Sales) for each business segment compared to Zomato.
We initiate coverage on Swiggy with BUY and a TP of INR 740.

Recent innovations could help to gain share in food delivery Abhisek Banerjee
Our survey data shows a growing preference (mind share) for Swiggy among [email protected]
+91 22 6807 7574
restaurant partners. Also, Swiggy has showcased great execution on ‘Swiggy
Manoj Menon
BOLT’, their 10-min food delivery offering and ‘Swiggy BLCK’, their premium
[email protected]
loyalty offering. Management notes Bolt now forming ~9% of Swiggy’s food Jayram Shetty
delivery Gross Order Value (GOV). We think only 200–300bps of this is fresh [email protected]
demand; the rest is replacement demand. In our view, this additional demand
could aid in market share gains in the near term.
New entrants unlikely to disrupt quick commerce meaningfully Market Data
We believe the swift ramp-up of their dark store footprint is helping incumbents
Market Cap (INR) 1,136bn
create a barrier to entry into the segment. Our analysis indicates that if they Market Cap (USD) 13,230mn
manage to execute their plans properly, top 3 incumbents would control >75% Bloomberg Code SWIGGY IN
(by FY26) of the potential dark stores that are feasible in India, which would Reuters Code SWIG.BO
make it very difficult for new entrants to meaningfully disrupt the space. 52-week Range (INR) 617 /391
Free Float (%) 9.0
Well baked: Risk-reward skew (3.8:1) to the upside ADTV-3M (mn) (USD) 0.0
We see the Swiggy’s stock trading at INR 850 in our bull-case scenario and
INR 415 in our bear-case, implying a risk reward skew of 3.8:1 to the upside. Price Performance (%) 3m 6m 12m
Absolute 0.0 0.0 0.0
Valuation Relative to Sensex 0.0 0.0 0.0
We initiate coverage with a BUY rating. We use a three-stage DCF to arrive
at a target price of INR740, assuming WACC/terminal growth of 11.5%/5%;
ESG Score 2023 2024 Change
initiating coverage with a BUY rating.
ESG score NA NA NA
Environment NA NA NA
Financial Summary Social NA NA NA
Y/E March (INR mn) FY24A FY25E FY26E FY27E Governance NA NA NA
Net Revenue 1,12,474 1,54,949 2,17,261 3,01,558 Note - Score ranges from 0 - 100 with a higher
score indicating higher ESG disclosures.
EBITDA (22,080) (23,996) (15,529) 8,740
Source: SES ESG, I-sec research
EBITDA Margin (%) (19.6) (15.5) (7.1) 2.9
Net Profit (23,435) (26,931) (17,897) 3,304
EPS (INR) (10.7) (12.1) (8.0) 1.4
EPS % Chg YoY - 12.7 (33.5) -
P/E (x) (47.4) (42.1) (63.2) 350.8
EV/EBITDA (x) (48.3) (44.2) (69.0) 121.8
RoCE (%) (30.8) (31.6) (21.8) 0.8
RoE (%) (27.9) (29.3) (17.7) 3.2

Please refer to important disclosures at the end of this report