New Delhi– Food delivery giant Swiggy Limited has received its first ‘sell’ rating since going public in November 2024, as analysts at Ambit Capital raised concerns over its declining position in both the food delivery and quick commerce segments.
In a newly released report, Ambit Capital highlighted that Swiggy, once an industry leader, now ranks second in food delivery and third in quick commerce. The brokerage initiated coverage on the company with a cautious outlook, setting a target price of Rs 310 per share, signaling a potential downside of over 20% from its last traded price.
In food delivery, Zomato has overtaken Swiggy with a broader reach, a larger user base, and higher order volumes. Although the pace of Swiggy’s market share erosion has slowed, Ambit projects its long-term market share to stabilize around 42%.
Swiggy’s quick commerce arm, Instamart, is also facing mounting challenges. Once the market leader, Instamart has now fallen behind competitors Blinkit and Zepto. Ambit pointed out that Instamart’s addressable market is limited to just 30 to 50 cities, criticizing Swiggy’s over-reliance on advertising revenue and underestimation of its rivals.
The report suggests that Instamart will require significant investment to close gaps with competitors in key areas like product assortment, store efficiency, customer acquisition, and advertising reach.
While JPMorgan recently noted Swiggy’s efforts to expand its store network and catch up with Zepto, Ambit remains more skeptical. A key factor behind Instamart’s decline has been its late adoption of the industry trend for 10-15 minute deliveries. Competitors Blinkit and Zepto prioritized ultra-fast delivery early, whereas Swiggy initially stuck with a 30-minute model.
Instamart has also lagged in product variety and marketing, further widening the gap with competitors. As a result, Swiggy now faces intense competition across both its core business areas, the report concluded. (Source: IANS)
