At 52-week low! Swiggy shares dip below IPO price amid sustained sell-off

Shares of food delivery aggregator Swiggy fell another 5 per cent on Tuesday, January 28 to their 52-week low. Today is the third straight day of fall for the new-age tech stock, with the scrip declining 8.7 per cent on Monday and 2.5 per cent last Friday.

With Tuesday's drop, the stock has slipped below its IPO price of ₹390, making an intraday low of ₹389.25. The stock has already lost 37 per cent from its record high of ₹617 hit in December 2024.

The stock has declined in 13 out of the 20 trading sessions of January, shedding over 26 per cent this month after a 15 per cent rise in December.

What's ailing Swiggy shares?

Swiggy’s stock has been under pressure since competitor Zomato announced its December quarter results, revealing a slowdown in its core food delivery business. Zomato also disclosed plans to accelerate investments in its quick commerce arm, Blinkit, aiming to achieve its target of 2,000 dark stores a year earlier. While this strategy aligns with long-term growth objectives, it has caused Blinkit to remain loss-making in the near term, further impacting market sentiment for the sector.

Zomato’s financials for Q3 FY25 painted a mixed picture. The company reported a 57 per cent year-on-year decline in profit after tax (PAT) to ₹59 crore, down from ₹138 crore in Q3 FY24. Sequentially, PAT also dropped sharply from ₹176 crore in Q2 FY25. However, its revenue from operations surged 64 per cent YoY to ₹5,404 crore, up from ₹3,288 crore a year ago. Despite showing profitability improvements on an annual basis, Zomato's EBITDA margins suffered sequentially due to its investments in expanding Blinkit’s network.

Swiggy’s Financial Updates Awaited

Swiggy is yet to announce the date for its board meeting to release its December quarter results. However, analysts have expressed caution about its growth and profitability outlook. 

HSBC Global Research maintained a “Hold” rating on Swiggy in December with a target price of ₹550, citing the intense competitive landscape as a significant challenge for the company.

Brokerage Opinions

Despite the recent sell-off, brokerage firm JPMorgan initiated coverage on Swiggy with a “Buy” rating and a target price of ₹730. JPMorgan emphasised Swiggy’s potential to catch up in both food delivery and quick commerce segments due to its renewed focus and improved execution strategies.

Similarly, CLSA had previously assigned an “Outperform” rating with a target price of ₹708, highlighting Swiggy’s ability to scale its core business and achieve faster profitability expansion compared to peers over FY25–FY28. At its current price, Swiggy is trading at a significant discount to Zomato in terms of Enterprise Value to Gross Order Value (EV/GOV) and Enterprise Value/Revenue (EV/Revenue), which analysts believe is overly pessimistic.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.