Motilal Oswal upgrades Swiggy to ‘purchase’ ranking, sees 32 % upside prospective. Should you invest?

Food distribution industry obtains a fresh increase as the domestic broker agent firm Motilal Oswal sees stronger growth, alleviating competitors, and boosting success. The brokerage firm has actually upgraded its rating on Swiggy to ‘purchase’, designating a target cost of Rs 560, indicating a potential benefit of 32 %. It likewise kept its ‘get’ score on Infinite with a changed target rate of Rs 420, recommending a 29 % upside from current degrees. In its most recent sector upgrade, Motilal Oswal revised up its food shipment (FD) growth estimates for both Swiggy and Zomato to 21 – 23 % for FY 26 -FY 27, up from the earlier estimate of 19 – 20 %. This bullish modification is driven by faster-than-expected top-line healing, improving system economics, and greater exposure on productivity.
To show this stronger growth expectation, the broker agent has elevated its evaluation multiple for food shipment businesses from 27 x to 35 x FY 27 E adjusted EBITDA. The step emphasizes climbing investor confidence in the sector’s long-lasting earnings trajectory.

Quick Business improving

Quick business platforms like Instamart and Blinkit are showing indicators of moving quicker toward earnings. Motilal Oswal has actually upgraded its productivity expectation, driven by alleviating competitors and a stagnation in dark store development after coming to a head in Q 4 FY 25 Reduced consumer procurement expenses, thanks to lowered discounting, and GST reforms encouraging adoption in non-metro areas are additionally supporting this trend. These aspects integrated are anticipated to increase contribution margins in the coming quarters.

Macro tailwinds reinforce the bull situation

Motilal Oswal sees the wider environment becoming increasingly helpful for both food distribution and fast commerce. After going stale at 17– 18 %, food delivery growth is expected to get over the next 2– 4 quarters. This renewed energy is likely to be driven by the upcoming cheery season, the favorable influence of current GST reforms on demand and conformity, and an extra secure, lasting competitive landscape.

Target rate alterations

Riding on the back of these favorable developments, Motilal Oswal has actually modified its target rates for key players in the room. Swiggy has been upgraded to a ‘BUY’ rating, with a brand-new target rate of Rs 560, showing a prospective advantage of 32 %. On the other hand, Eternal’s BUY rating has actually been preserved, with a changed target cost of Rs 420, implying a 29 % upside from current degrees.

Share price update

During Friday’s trading session at 9 40 am, both food distribution supplies showed positive energy. Swiggy shares climbed 1 5 % to Rs 429 60, while Infinite shares gained 1 8 %, at Rs 332 Over the past 3 months, both stocks have currently seen significant gains, with Swiggy up 17 % and Infinite (Zomato) surging 28 %.