Jefferies India has revised its Swiggy share price target downward to ₹330 apiece following the announcement of Q2FY27 results, representing a significant reduction from its previous target of ₹435. Despite the target cut, Jefferies maintains a 'Buy' rating on Swiggy shares, citing the company's strong operational metrics and growth prospects. The investment bank noted that Swiggy's Q2FY27 results delivered in-line performance on both topline and EBITDA, though the quick commerce segment continues to face challenges with adjusted EBITDA losses swelling to a three-quarter high of ₹900 crore. Jefferies believes that a reduction in Q/C losses is essential for true value discovery, given that this remains a key investor concern for the stock.
Swiggy delivered impressive Q2FY27 results with net revenue of ₹75.7 billion, representing 11.1% quarter-on-quarter and 36.1% year-on-year growth, significantly exceeding analyst estimates of ₹71.5 billion. The food delivery business showed robust growth with GOV increasing 17.7% year-on-year, while contribution margin expanded 10 basis points quarter-on-quarter to 7.7%. The adjusted EBITDA margin for food delivery improved to 3.4% versus the estimated 3.3%, demonstrating strong operational leverage. Instamart's GOV reached ₹92.3 billion, up 31.4% year-on-year, with the quick commerce segment showing NOV growth of 13.4% quarter-on-quarter driven by addition of 1.3 million MTUs, targeted pricing investments to reactivate dormant users, and network expansion. Instamart added 69 stores in Q2FY27, as management focused on improving quality of services in dense urban clusters.
For the full year FY27, Motilal Oswal expects Swiggy's revenue to grow 27.6% while adjusted EBITDA losses are likely to increase from ₹13.6 billion to ₹14.9 billion. The brokerage has revised its valuation approach, valuing the food delivery business at 32x FY28E EV/EBITDA, 1x FY28E EV/Sales for out-of-home, platform, and supply chain businesses, and quick commerce using DCF methodology. This comprehensive valuation framework reflects the company's diversified business model and growth prospects across multiple segments. ICICI Securities' revised target price of ₹400 implies an upside of 32% from current levels, reflecting improved confidence in Swiggy's operational trajectory, while Jefferies' revised target of ₹330 suggests a 48% upside potential despite the reduction from the previous ₹435 target.
The brokerage's revised target price of ₹400 reflects improved confidence in Swiggy's operational trajectory, with both Motilal Oswal and ICICI Securities demonstrating the market's positive sentiment toward the quick commerce platform. Food delivery's margin expansion remains a key positive for Swiggy, up 30 basis points quarter-on-quarter, which could extend into H2 with NOV growth accelerating. Quick commerce may deliver sequential EBITDA margin gains in H2FY27 with the reversal of discounts through the next few quarters, and as the IOCC is implemented in Q3FY27. The discounted cash flow (DCF) valuation methodology supports the revised positive stance on Swiggy, indicating that the company's quick commerce business is now valued more favorably compared to previous assessments. Jefferies has kept Swiggy shares in the list of high-risk-reward stocks while maintaining its 'Buy' rating, suggesting that while the stock faces near-term challenges, the long-term prospects remain compelling.
