Swiggy shares rise 5% in two days after Morgan Stanley initiates coverage with overweight rating

The global brokerage has set a price target of Rs 405, implying a potential upside of 22% from the stock’s previous close. The target also exceeds Swiggy’s IPO price of Rs 390.

In its report, Morgan Stanley highlighted three key drivers behind its positive outlook on Swiggy:

Improving Execution in Food Delivery: The brokerage expects Swiggy’s food delivery segment to grow at a compound annual growth rate (CAGR) of 15.8% between FY25 and FY28, supported by steady market share trends despite heightened competition.Quick Commerce Growth Potential: Swiggy’s quick commerce business (Instamart) is expected to grow its Gross Order Value (GOV) at a CAGR of 63% over FY25–28. The firm noted that Swiggy is aggressively investing in infrastructure and could regain market share as the total addressable market (TAM) expands faster than expected.

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Valuation Opportunity: Morgan Stanley believes the market is currently factoring in Swiggy’s high investment levels but not adequately valuing its revenue growth potential. The brokerage estimates that Swiggy lags market leader Zomato (Eternal) by two years in adjusted EBITDA and around 15% in food delivery market share.

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Swiggy is projected to achieve a 4.8% adjusted EBITDA margin in its food delivery business by FY28, compared to Zomato’s expected margin of over 6%. In quick commerce, Swiggy is expected to reach a 2.6% margin by FY31, trailing Zomato’s 4.7% due to differences in operating leverage.Morgan Stanley values Swiggy’s food delivery arm at approximately 52% of Zomato’s and its quick commerce unit at around 25%. On a consolidated basis, Swiggy’s price target implies an EV/adjusted revenue multiple of 3.1x for FY27 — a 51% discount to Zomato.

Swiggy shares are down 36% year-to-date but have gained 13.5% over the past month. The company’s current market capitalisation stands at Rs 86,517 crore.

Also Read: India’s top 10 priciest stocks in 2025: MRF to Elcid, see who tops the list(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)