Following a sharp 37% correction in its stock price over the last six months, Swiggy is presenting a highly attractive valuation for investors, according to a recent report by HDFC Securities. The brokerage firm has maintained a “BUY” rating on the food delivery and quick commerce giant, setting a target price of INR 460 per share.
According to the report, Swiggy’s current valuation—trading at approximately 32x its FY28 Enterprise Value to EBITDA for its Food Delivery (FD) segment—effectively means investors are getting its Quick Commerce (Instamart) and Out-of-Home (OOH) businesses for free.
Here is a breakdown of the key drivers behind HDFC Securities’ bullish outlook on Swiggy.
Food Delivery Shows Resilience Amid Macro Headwinds
Despite recent macroeconomic challenges, particularly LPG shortages and elevated crude oil prices, Swiggy’s core Food Delivery segment is holding steady.
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Volume Holds Firm: Interactions with restaurant partners indicate that while menus have been condensed due to the reduced LPG supply, the overall impact on order volumes remains surprisingly minimal.
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Protecting Margins: To counteract potentially higher fulfillment costs—such as having to increase delivery radiuses to maintain volume—Swiggy has taken preemptive measures, including platform fee hikes of 17% to 19%.
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Steady Growth: HDFC Securities projects a healthy 17% Gross Order Value (GOV) growth for the FD segment, alongside steady margins of around 3%. Furthermore, the report notes that in the FD business, the flow from EBITDA to Profit After Tax (PAT) is greater than 100%.
Instamart’s Clear Path to Profitability
Swiggy’s Quick Commerce arm, Instamart, is currently the “free” upside in the company’s valuation, but it is aggressively charting a course toward profitability. The platform is heavily focused on achieving Contribution Margin (CM) break-even by Q1FY27.
To bridge the 360-basis-point gap to break-even, Instamart is expected to deploy several strategic levers:
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Shedding Unprofitable Orders: The platform may begin letting go of low Average Order Value (AOV) orders that drag down margins.
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Reinstating Fees: User fees, which were previously waived in Q3 for orders over INR 299, are expected to be reinstated to boost revenue per order.
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Shifting the Product Mix: Instamart is experiencing rapid sourcing margin gains by shifting its focus toward higher-margin non-grocery products over the 9MFY26 period.
Financial Outlook & Valuation
Driven by the steady performance in Food Delivery and the optimization of Instamart, HDFC Securities has slightly improved its adjusted EBITDA loss estimates for the company. The revised estimates project an adjusted EBITDA loss of INR 14.8 billion in FY27 (down from INR 14.9 billion) and INR 4.2 billion in FY28 (down from INR 4.7 billion).
The Bottom Line: HDFC Securities maintains its BUY rating with a Sum-of-the-Parts (SOTP) based target price of INR 460 per share. This valuation includes a 40x multiple on March-28 EV/EBITDA for the Food Delivery segment, and a 0.6x multiple on March-28 Net Order Value (NOV) for Instamart, reinforcing the thesis that the current dip is a prime buying opportunity.
Target Price: The target price is ₹460 which is a whopping 76% upside from the CMP of ₹260.
