Thu Nov 14 13:58:42 UTC 2024: ## Swiggy Lags Behind Zomato, But HDFC Securities Sees Potential for Growth

**Mumbai, India:** HDFC Securities has initiated coverage on food delivery platform Swiggy with an “Add” rating and a target price of Rs 430, suggesting a potential downside of 6% from Wednesday’s closing price. The brokerage believes Swiggy is trailing competitor Zomato by 4-6 quarters in key metrics like gross order value (GOV) growth, particularly due to slower adoption of monthly transacting users (MTUs).

Swiggy has faced challenges in its core offerings of food delivery and quick commerce, losing ground to Zomato in recent years. Despite this, HDFC Securities expects a long-term convergence of fortunes due to the duopoly structure in the market.

The brokerage forecasts a 26% sales CAGR for Swiggy, with adjusted Ebitda margins improving significantly over the next few years. However, Swiggy’s Instamart quick commerce service continues to lag Zomato’s Blinkit in terms of growth and efficiency, with lower order density, average order value, and MTUs.

Despite the challenges, HDFC Securities notes that Swiggy is making progress in discretionary sales, which should boost average order values. The brokerage also anticipates a narrowing of the take-rate differential between Swiggy and Zomato through higher commission and advertising income.

While Swiggy’s path to Ebitda margin breakeven in Instamart is complex, it’s considered plausible.

Meanwhile, JM Financial initiated coverage on Swiggy with a “Buy” rating and a target price of Rs 470, highlighting the company’s fast growth potential and multiple levers for sustainable margins.

Swiggy’s shares closed at Rs 455.95 on BSE, up 10.67%, suggesting investor optimism despite the competitive landscape.

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