Swiggy, one of India’s leading food delivery platforms, continues to expand its presence in the quick commerce and online food delivery space. Backed by strong growth potential and a growing customer base, the company has attracted positive attention from analysts despite ongoing losses. Check out the target, which has been reaffirmed by the brokerage.
Target & Rational
ICICI Securities has given a buy call on Swiggy with a target price of Rs. 740 percent, which translates to an upside of 102 percent from current levels of Rs. 366. The company has been delivering strong revenue growth, which is a positive indicator, even though it continues to report a net loss after tax. The target price of Rs. 740 per share is based on a three-stage Discounted Cash Flow (DCF) model. This valuation assumes a cost of capital (WACC) of 11.5 percent and a long-term terminal growth rate of 5 percent for Swiggy’s business.
This means that to calculate Swiggy’s value, analysts at ICICI Securities used a DCF model that expects the company to grow steadily at 5 percent every year in the long run. They also used a rate of 11.5 percent to account for the risk and return expected by investors, which is called the cost of capital. Together, these help estimate what Swiggy’s future cash flows are worth today.
Also read: 2 Stocks to buy now for an upside of up to 25%; Recommended by Trade Brains portal – June 19
The company reported a 44.78 percent YoY increase in revenue from Rs. 3,046 Crore in Q4FY24 to Rs. 4,410 Crore in Q4FY25. On a QoQ basis, the company reported an increase of 10.44 percent in revenue from Rs. 3,993 Crore in the previous quarter.
Their Net loss increased from Rs. 555 Crores to Rs. 1,081 Crores from Q4FY24 to Q4FY25, and on a QoQ basis, the company reported an increase in net loss from Rs. 799 Crores to a loss of Rs. 1,081 Crore.
Out of the total revenue, supply chain & distribution accounted for the highest revenue with 45.43 percent followed by food delivery at 36.93 percent, Quick Commerce at 15.62 percent and out-of-home consumption at 1.51 percent, the other 0.48 percent comes from platform innovations.
Swiggy is one of India’s leading online food delivery platforms, founded in 2014 and headquartered in Bengaluru. Operated by Bundl Technologies Pvt. Ltd., Swiggy began as a food delivery service connecting users to a wide network of restaurants through its app and website. Over the years, it has expanded its offerings to include Swiggy Instamart, a quick-commerce grocery delivery service, and Swiggy Genie, a pick-up and drop courier service.
Written By Abhishek Das
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
