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HSBC has ascribed a price target of ₹550 for Swiggy’s shares, which is nearly the same price at which the stock had closed on Thursday. Swiggy shares had ended at ₹540 on Thursday.
The brokerage said that Swiggy has been a pioneer in both food delivery and quick commerce segments. However, it has not been able to sustain its early mover advantage.
HSBC believes that catching up on both growth and profitability could be a challenge in light of severe competitive intensity.
A similar concern was highlighted by brokerage firm Jefferies on incumbent quick commerce players. Jefferies had said that aggressive discounting by new players like Amazon Tez may require existing players to respond, which may pose a risk to consensus’ profitability estimates.
The brokerage said that over financial year 2024 and 2027, HSBC expects Swiggy’s Food Delivery business to grow at a compounded annual growth rate (CAGR) of 16% and nearly 65% for the Quick Commerce business.
However, HSBC does not see Swiggy breakeven on an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) basis before financial year 2028.
In its first quarterly results announcement post its listing, Swiggy reported a net loss of ₹625.5 crore, which is on similar levels when compared to the June quarter as well as the September quarter last year.
“We expect contribution break-even by the October-December period of 2025 and an adjusted EBITDA break-even by the July-September quarter of financial year 2027,” Swiggy said in its letter to shareholders.
Out of the seven analysts that now have coverage on Swiggy, three of them have a “sell” rating on the stock, while two each have a “buy” and “hold” rating.
Shares of Swiggy are now trading 1.4% higher at ₹547.5, which is 40% higher than its IPO price of ₹390.
