Swiggy shares climb 4% as Morgan Stanley initiates coverage with 'Overweight' rating

Shares of online food and grocery delivery platform Swiggy Ltd recorded a decent uptick in Tuesday's trade, rising 4.15 per cent to hit a high of Rs 347.25.

Today's upward move came after Morgan Stanley initiated coverage on the stock with an 'Overweight' rating and assigned a target price of Rs 405.

The global brokerage highlighted enhanced execution in food delivery and a significant expansion into quick commerce (QC) as primary growth drivers for the company.

The brokerage expects India's food delivery market to continue being dominated by two major players.

With Swiggy sharpening its execution, Morgan Stanley believes it has the potential to narrow the profitability gap with its competitor, Eternal (formerly Zomato), in this space.

If Swiggy retains its current market share, the brokerage firm projects that the total addressable market for this sector could grow to $57 billion by 2030.

Morgan Stanley has valued Swiggy's food delivery business at 25 times its FY28 adjusted EBITDA (Earnings before interest, taxes, depreciation and amortisation), which is approximately 5 per cent lower than Eternal's equivalent multiple.

On technical setup, the scrip traded higher than the 5-day, 10-, 20-, 30-day and 50-day simple moving averages (SMAs) but lower than the 100-day simple moving average (SMA). Its 14-day relative strength index (RSI) came at 54.14. A level below 30 is defined as oversold while a value above 70 is considered overbought.

Around 8.26 lakh shares were last seen changing hands today. The figure was lower than the two-week average volume of 19.65 lakh shares. Turnover on the counter came at Rs 28.24 crore, commanding a market capitalisation (m-cap) of Rs 85,557.02 crore.