Swiggy shares soared nearly 2% to a day high of Rs 543.05 on the BSE after domestic brokerage company Axis Capital initiated coverage of the stock with a 'buy' recommendation and a target price of Rs 640.

The domestic brokerage firm's target price represents a 20% increase in the stock's value over its closing price on Friday. Swiggy, according to Axis Capital, is in second position but remains in contention.

"Compelling investment opportunity as India's second-largest Q-com/food-delivery player as the food-delivery and Q-com businesses remain underpenetrated, with a long growth runway," according to Axis Capital's note.

Swiggy's ambitious retail expansion objectives in Q-com should help boost its GOV and top-line growth, while cost control is improving. According to the brokerage business, Swiggy's ideation and innovation talents, as well as its stronger leadership team, should help it maintain its market leadership position.

In addition, around 11.1 lakh shares of the company changed hands in a block deal during an early session today. However, the official parties to the transaction are not yet known.

Swiggy's shares were listed on exchanges earlier in November, at Rs 420 on the NSE and Rs 412 on the BSE. Since then, the stock has risen by 30% and almost 32% on the NSE and BSE, respectively.

Currently, the stock is trading above all of its important exponential moving averages and bouncing near the 61 level on the relative strength indicator (RSI).