Swiggy Share Prices Fall, but Analysts Still Hopeful
Shares of food delivery company Swiggy fell today, ahead of the release of its third-quarter results. The company’s shares have dropped over 30% from their peak in December last year, trading near their issue price of Rs 390. This drop comes as competition heats up in the food delivery market.
Analysts Remain Bullish Despite Losses
Despite the falling share price, many market analysts are optimistic about Swiggy’s future. Eleven out of sixteen analysts recommend buying Swiggy shares, with an average price target suggesting a 40% rise in the next 12 months. This positive outlook is fueled by the booming quick commerce sector in India, where Swiggy’s Instamart service is a key player.
Competition and Losses Remain a Concern
Swiggy’s losses are expected to increase, mainly due to shrinking margins in its Instamart business. Although the demand for food and quick delivery services is growing, tough competition is putting pressure on profits. Zomato, a rival food delivery company, recently reported slower growth than expected, raising concerns among investors about the entire industry. Zomato also anticipates further losses in the near future. [[Competition]] between companies like Zomato’s Blinkit, Swiggy Instamart, and Zepto is likely to ease up, as these companies are predicted to slow down their expansion plans, according to a report by HSBC Global Research.
Swiggy Poised for Growth in Quick Commerce
Despite these challenges, research firms like Bernstein Research see Swiggy as a winner in the quick commerce market. They predict that Swiggy will experience significant growth in the medium term, benefiting from the increasing demand for fast delivery services. The company is expected to see a compound annual growth rate (CAGR) of over 90%. The Rs 400 mark is the immediate support for the stock and a fall below that could send the stock towards its listing price. On the upside, a strong close above the Rs 460 level could trigger a renewed bullish momentum. Eleven of the 16 analysts tracking the company have a ‘buy’ rating, two suggest a ‘hold’, and three have a ‘sell’. The average of the 12-month analysts’ price target implies a potential upside of 40%.
Market Volatility Impacts Share Prices
The fall in Swiggy’s share price also reflects broader market trends. The Indian stock market has been volatile recently, with major indices like the Nifty and Sensex experiencing fluctuations due to the performance of companies like Asian Paints and ONGC.