“We believe the stock’s price is at 35-40% discount to Zomato and see room for this valuation discount to narrow as the company demonstrates stabilising market share,” said UBS’s analysts in a client note.
Swiggy shares, which rose 7.1% on Tuesday, have gained 12% since listing on November 13 at ₹412.
The brokerage said current valuations leave room for upside.
“With early signs of market share stabilisation in food delivery, and recent investments and strategic changes in q-com (Quick commerce) leading to likely volume growth (and margin) recovery in q-com, we believe this discount (compared to Zomato) should narrow over time,” said UBS.
The risk-reward for the stock is attractive as it is valued at an estimated Enterprise Value (EV) to Revenue of 6.2 times, as against 9 times for Zomato, said the brokerage.”Swiggy’s volume growth lagged Zomato in CY23 but has improved in CY24 with the gap between the two in terms of volume growth narrowing meaningfully,” said UBS.Zomato shares, which have gained about 125% in 2024, closed at ₹280 on Tuesday, up 2.4% over the previous trading session. UBS has a price target of ₹320 for Zomato, implying an upside of 14.3%.
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