Swiggy shares fall after six days as JM Financial lowers rating, check details 

Shares of Swiggy slipped over 3% in early deals after brokerage JM Financial downgraded the stock to 'reduce'. Commenting on the financials of the online food delivery firm, the brokerage said Swiggy’s balance sheet remains a cause of concern and requires remedial measures, in its opinion. 

"While media reports suggest the company is considering a sale of its 12% stake in Rapido to recapitalise its balance sheet, we believe it needs a much bigger war chest," said JM Financial.  

At a time when Swiggy is fast depleting its cash balance and there are growing competitive threats, it needs to take cues from its larger peer, which recapitalised itself last year despite no visible signs of balance sheet concerns. 

"With Blinkit’s guidance suggesting plans to double its store count over the medium term, we believe Instamart’s curbed expansion strategy runs the risk of meaningfully falling behind its more ambitious competition," said the brokerege. 

The brokerage reiterated that Swiggy needs a much larger fund-raise, of greater than USD 500mn, to support its long-term ambitions in quick commerce. 

"Till this hangover is lifted, we believe the stock is unlikely to deliver meaningful returns to shareholders. We change our rating from Hold in our previous rating system to REDUCE in the new rating system," added the brokerage while assiging a price target of Rs 440.   

The stock slipped 3.07% to Rs 447 today against the previous close of Rs 461.20 on BSE. Market cap of the firm fell to Rs 1.1 lakh crore. It has fallen after rising for six days. 

Total 4.40 lakh shares of the firm changed hands amounting to a turnover of Rs 19.89 crore on BSE.

Swiggy is engaged in the business of inter alia, general carriers and providing delivery services through mobile based application and web enabled services and to collect, consign, distribute, transfer and deliver goods through various carriers.