Swiggy Share Price Falls After UBS Cuts Target; Stock Under Pressure Amid Quick-Commerce Concerns

Shares of Swiggy Ltd remained under pressure on Wednesday, January 14, after brokerage firm UBS cut its target price on the stock. The Swiggy share price opened at Rs. 348.10, slightly lower than the previous close, and slipped nearly 3% to an intraday low of Rs. 341.30. The stock later recovered part of the losses and was trading at Rs. 345.50, down 1.38% at the time of writing.

Why Swiggy Shares Are Falling

The decline in Swiggy's stock price today comes after UBS issued a cautious note on the quick-commerce sector.

The broking in its report said that "Rising competition, rising discounting pressure, and continued network expansion costs are impacting profitability across food delivery and instant commerce platforms. While food delivery growth is showing signs of improvement, competition in the segment remains broadly stable, whereas quick commerce has become far more competitive, putting pressure on margins."

Adding to investor concerns, the Labour Ministry on Tuesday directed quick-commerce platforms, including Swiggy, Zomato, Blinkit and Zepto, to remove the 10-minute delivery time limit from their operations and branding.

Union Labour Minister Mansukh Mandaviya met representatives of these platforms and asked them to prioritise the safety of delivery partners, citing concerns that ultra-fast delivery promises lead to unsafe practices and accident risks. This is adding pressure on Swiggy shares and other food delivery stocks in India.

Swiggy Target Price

In its report, UBS cut adjusted EBITDA estimates for Swiggy by 12-28% over the next two to three years.

Domestic brokerage firm JM Financial maintained an 'ADD' rating on Swiggy but reduced its valuation multiple for Instamart, Swiggy's quick-commerce arm.

JM Financial cut Swiggy's target price to Rs. 400 from Rs. 460 earlier, showing an upside of around 13% from current levels. The broking also highlighted concerns over continued high cash burn.

About Swiggy

Swiggy is one of India's leading on-demand convenience platforms, offering food delivery, quick commerce via Instamart, and out-of-home dining/dining-out services across 700+ cities. Listed on NSE and BSE in November 2024 by ticker symbol SWIGGY, it competes fiercely with Zomato and Blinkit in a high-growth but loss-making sector.

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