Swiggy, a freshly listed food and grocery delivery platform, slumped 4.4% to a low of Rs 519.50 on the BSE in the morning session as 6.5 crore shares of the company were available for trading.
The one-month required lock-in period expired today, freeing up 6.5 crore Swiggy shares, or 3% of the company's total outstanding shares. As a result, the price dropped as some pre-IPO investors may have attempted to record profits.
Swiggy shares are currently up around 33% from their IPO issue price. The stock rose more than 5% in the previous session after global brokerage company CLSA commenced covering with an outperform rating and a target price of Rs 708.
The firm believes Swiggy's execution will improve as growth and profitability accelerate, and it expects Indian rapid commerce to increase 6x in FY24-27.
Swiggy's gross order value (GOV) climbed 30% YoY to Rs 11,306 crore, while platform monthly transacting users increased 19.2% YoY to 17.1 million, demonstrating consistent user growth.
Motilal Oswal predicts Swiggy's food delivery orders to increase at 12.5% per year, with an AOV growth of 1.4%, resulting in a GOV growth of 14.1% during FY24-37, but Q-commerce is predicted to develop faster, with orders increasing at 23.6% per year, AOV growth of 3.2%, and GOV growth of 27.6%.
"What was interesting, however, was Swiggy's guidance for growing faster than the "category average" (aka Zomato) over the medium term in food delivery," Motilal Oswal said. Despite the positive results, the brokerage maintained a "neutral" rating for Swiggy, noting competitive threats from Zomato and Blinkit. The company valued Swiggy at Rs 475 per share.
Swiggy's expansion goals include increasing the number of Instamart dark stores by March 2025 and investing Rs 1,600 crore in its subsidiary Scootsy Logistics for future growth. The corporation also announced the foundation of a wholly owned subsidiary to pursue sports-related activities.
