Nomura initiates coverage on Swiggy stock with Buy rating, IDR550 target

Nomura/Instinet initiated coverage on Swiggy Ltd (SWIGGY:IN) with a Buy rating and a price target of IDR550.00, citing the company's strengthening market position within India's food delivery duopoly. The firm highlighted Swiggy's product innovations, including its 10-minute Bolt quick delivery service which is driving market share gains against competitor Zomato. Nomura projects a 100 basis point market share increase in fiscal year 2026, approximately 20% compound annual growth rate in gross order value for Swiggy's food delivery business from FY2025-2027, and a 120 basis point improvement in adjusted EBITDA margin over the same period as the company scales operations.

Analysis

Nomura/Instinet has initiated coverage on Swiggy Ltd with a 'Buy' rating and a price target of IDR550.00, signaling strong confidence in the company's trajectory within India's food delivery duopoly. The core of the bullish thesis rests on Swiggy's successful product innovation, particularly its 10-minute quick delivery service 'Bolt', which now constitutes 12% of its total deliveries and is a key driver of market share gains against its primary competitor, Zomato. Nomura projects this momentum will result in a 100 basis point market share increase for Swiggy by fiscal year 2026. Financially, the outlook is robust, with forecasts of an approximately 20% compound annual growth rate in gross order value from fiscal years 2025 to 2027. Concurrently, operational leverage is expected to improve, with projections for a 120 basis point enhancement in adjusted EBITDA margin over the same period. The analysis concludes that in the long term, the contribution and adjusted EBITDA margins for both Swiggy and Zomato will likely converge as they scale, indicating a maturing market structure.

Key Decisions for Investors

• Investors with private market exposure to the Indian technology sector should view Nomura's initiation as a positive validation of Swiggy's competitive strategy, particularly its successful innovation in the quick commerce segment.
• Holders of competitor Zomato should closely monitor for competitive responses, as Swiggy's forecasted market share gains and improving profitability signal intensifying pressure within the duopoly.
• The projection of simultaneous 20% gross order value growth and 120 basis points of margin expansion suggests the Indian food delivery sector is advancing towards profitable growth, a key factor to incorporate when valuing companies in this space.