Swiggy shares: Price targets amid new launch, cess concerns and QC competition

Domestic brokerage firms have shared their view on Swiggy amid multiple newsflow. Swiggy's quick commerce (QC) arm Instamart has launched Maxxsaver, whie some media reports suggest that government of Karnataka is planning to collect a cess from aggregator platforms in order to support welfare schemes for gig workers.

Swiggy Instamart has launched Maxxsaver, which offers increased savings to customers on higher AOV purchase baskets (Rs 999 and higher). Swiggy is also selectively offering one-off discounts as 'free cash' to consumers to drive sales, said Kotak Institutional Equities. Maxxsaver is 8 per cent cheaper than Zepto’s super saver, it said.

A price comparison with other online retailers reveals that Maxxsaver’s pricing is aggressive and cheaper than the competing Zepto's super saver pricing. These offers can be positive for AOVs and can drive transactions, but will also result in higher near-term losses, it noted. Kotak has maintained its 'buy' rating on Swiggy with a target price of Rs 400.

Shares of Swiggy surged more than 3.4 per cent on Wednesday to Rs 344.95 but finally settled at Rs 339, up 1.62 per cent. The company commanded a total market capitalization of more than Rs 77,500 crore. The stock is down 45 per cent from its 52-week high at Rs 617, hit in December 2024.

The cess report mentions that the ot will not be levied on the total transaction value, but rather it would be 1-2 per cent of the annual turnover of aggregators, with a maximum cap of 5 per cent of the amount payable to gig workers.
 

JM Financial estimates that the maximum cess payable by hyperlocal delivery companies would be 0.5-0.7 per cent of AOVs in their respective food delivery and quick commerce businesses. "We strongly believe these companies would eventually pass on the additional burden to their end customers rather than absorbing the impact," it said.

Assuming similar cess is introduced by other regional governments as well; at the upper end of the cess the impact on their profitability would be meaningful given that their sustainable margin guidance ranges between 4-5 per cent of AOVs. From a customer standpoint, we do not expect any material impact on ordering behavior if the pass through impact ranges between Rs 2-3 per order, JM added with a 'buy' rating and a target price of Rs 500.

Swiggy was listed at the bourses in November 2024, when the company raised a total of Rs 11,327.43 crore via its IPO, by selling its shares of Rs 390 apiece. The stock is currently 15 per cent below its IPO price.

On the other hand, BofA Securities downgraded Swiggy to 'underperform' led by its expectations of rising losses in the quick commerce business for next 12-15 months and slowing growth/slower pace of margin improvement in food delivery. "We see further downside risks on the back of consensus estimate cuts; rising competition; multiple derating," it said with a target price of Rs 325.