Swiggy Shares Jump as Morgan Stanley Bets Big on Food Delivery Giant’s Growth Potential

Shares of Swiggy climbed 3 percent to Rs 342 during morning trade on June 3 after global brokerage Morgan Stanley began coverage with an “Overweight” rating.

The firm set a target price of Rs 405 per share, indicating a potential upside of 22 percent from the stock’s last close. This target slightly surpasses Swiggy’s IPO price of Rs 390.

At around 9:35 am, the stock was trading at Rs 339, showing a 1.7 percent increase from the last close on the NSE. Despite a tough start to the year, with shares down nearly 40 percent, the stock recorded a 4.15 percent rise in Tuesday’s trade, touching an intraday high of Rs 347.25.

Key Drivers Behind the Rating

Morgan Stanley’s investment thesis is supported by three major factors: improving performance in food delivery, a large and growing market for quick commerce, and a gap between investor assumptions on capital outlay and topline growth.

The brokerage expects India’s food delivery sector to remain a two-player market. With improved execution, Swiggy could close its profitability gap with Eternal, formerly Zomato.

Swiggy’s food delivery business has been valued by Morgan Stanley at 25 times its FY28 adjusted EBITDA, about 5 percent lower than Eternal’s corresponding valuation.

Quick Commerce: A Major Opportunity

Morgan Stanley views quick commerce as a strong growth vertical. If Swiggy maintains its current market share, the addressable market could reach $57 billion by 2030.

The brokerage has valued Instamart, Swiggy’s quick commerce arm, at 27 times its FY31 adjusted EBITDA—a 25 percent discount to Eternal’s Blinkit.

Despite expectations of significant future investments, Morgan Stanley believes the market is underestimating Swiggy’s topline growth potential. The brokerage sees this undervaluation as a key opportunity.

Sector-Wide Catalysts Identified

For the broader sector, Morgan Stanley outlined key short-term catalysts.

These include improved gross order value (GOV) in quick commerce for the June quarter, better unit economics in food delivery driven by reduced platform-funded discounts and improved fixed cost absorption, and stabilisation in competitive pressure.

These factors could uplift the entire sector, including Swiggy.

Technical Indicators and Trading Volume

On the technical front, Swiggy’s stock traded above the 5-day, 10-day, 20-day, 30-day, and 50-day simple moving averages (SMAs), though it remained below the 100-day SMA.

The 14-day relative strength index (RSI) stood at 54.14. An RSI below 30 indicates oversold conditions, while a reading above 70 signals overbought territory.

Trading activity remained moderate, with around 8.26 lakh shares changing hands—lower than the two-week average volume of 19.65 lakh shares.

Turnover on the counter was recorded at Rs 28.24 crore, while the company’s market capitalisation stood at Rs 85,557.02 crore.

Valuation and Competitive Landscape

Swiggy’s valuation in food delivery reflects confidence in its growth and operational improvements.

Although valued slightly below Eternal, Morgan Stanley’s outlook is optimistic, given Swiggy’s execution strategy and increasing market stability.

Quick commerce remains a critical area. Instamart’s valuation, despite being at a discount to Blinkit, signals its growing importance.

Morgan Stanley believes the gap between market expectations and Swiggy’s actual growth potential presents a strategic investment window.

Risks to Swiggy’s Growth

Morgan Stanley also flagged potential risks. A slip in Swiggy’s operational performance could impact market share in both food delivery and quick commerce.

Rising competition might compel higher investments, increasing cash burn and possibly resulting in equity dilution. The brokerage also noted structural concerns like regulatory changes related to gig workers and FDI norms in retail, which could affect Swiggy’s and its peers’ business models.