JP Morgan initiates coverage on Swiggy; sees company emerging as "an underappreciated winner"- Grow Mudra

JP Morgan initiates coverage on Swiggy; sees company emerging as "an underappreciated winner"

19 Dec , 2024 By : Debdeep Gupta

Global brokerage firm JPMorgan is the latest global firm to initiate coverage on the food delivery app Swiggy. The brokerage issued an overweight call with a target price of Rs 730 per share.

Analysts at the brokerage were positive about the newly listed food delivery service and see it catching up across both food delivery and quick commerce due to a renewed focus and improved execution. The note added that they expect the company to hit a critical scale across both core businesses, which will help enable faster-than-peer expansion in profitability over FY2025E-28.

While Swiggy currently trades at around a 32-42 percent discount to Zomato, the brokerage suggests that this valuation appears overly pessimistic and that they see Swiggy emerging as an underappreciated winner in India’s local services ecosystem. "At the current price, Swiggy is trading at 1.8 times Enterprise Value to Gross Order Value (EV/GOV) and at 6.1 times Enterprise Value/Revenue (EV/Revenue) on financial year 2026 earnings estimates, which is a 32% to 42% discount to Zomato," the brokerage highlighted.

Swiggy shares were listed at a premium of 7.69 percent at Rs 390 on the National Stock Exchange (NSE) on November 13. Since then, the stock has gained around 40 percent. The stock closed at Rs 576, around 1.67 percent lower.

Recently, another global brokerage firm, CLSA, initiated coverage on Swiggy with an outperform call. "Swiggy has significant growth potential as it addresses a very large TAM for food delivery and quick commerce," the CLSA note said.