Swiggy's listing surprised investors; here's what analysts have to say on valuation compare with Zomato

Swiggy Ltd's listing has amazed many stock market participants who were hoping for a tepid debut performance even as domestic benchmarks continued to crack. Shares of the food and quick-commerce platform got listed at a premium of 7.69 per cent at Rs 420 as against their issue price of Rs 390. The stock eventually climbed 15.13 per cent to touch a day-high value of Rs 449.

Analysts largely remained 'positive' on the counter from a longer-term perspective. Swiggy's valuation would offer more comfort and room on the upside as compared to Zomato at current levels, an analyst said. On the other hand, one of them advised to wait for fresh entry and "buy near issue price." With that being said, Swiggy's post-listing performance will be closely watched, especially its potential to close the valuation gap with Zomato and enhance operational efficiency.

"On the valuation front, Swiggy would offer more comfort and room on the upside as compared to Zomato at the current market price. And, we can see targets of Rs 550-600 levels," Aditya Agarwala, Co-founder, Head of Research & Investments at Invest4edu, told Business Today.

"Despite subdued market mood and sluggish response from overall investors, Swiggy listing surprised the market participants. Positive listing and price holding above its issue price of Rs 390 should be seen as strong demand for the company. This shows investors are positive on the space and fear of missing out factor is holding investors not to miss the sector growth story, similar to Zomato post listing trend," said Prashanth Tapse, Senior VP (Research), Mehta Equities.

"For allotted investors, 'Hold for long term' despite knowing short-term volatility and competitive pressures in the sector. For non-allottees, we advise to wait and watch for the price to settle and revisit to buy near issue price if we get due to market selloff pressure," Tapse added.

"Swiggy debuted at Rs 420, marking a listing gain of 7.6 per cent. Current market conditions have kept many investors on the sidelines, especially as numerous high-quality companies remain 15-20 per cent below their all-time highs. However, for those with a higher risk appetite, Swiggy could be an opportunity to capitalise on the valuation gap between Zomato and Swiggy, with potential gains hinging on Swiggy's ability to enhance operational efficiency over time," said Gaurav Garg, Research Analyst at Lemonn Markets Desk.

Separately, JM Financial has initiated a 'Buy' call on Swiggy with a target of Rs 470. "While on an absolute basis, Swiggy offers decent upside, we would prefer Zomato if asked to pick only one due to its superior execution in the past and market leadership across key segments," the brokerage stated.

Meanwhile, Indian equity benchmarks took a sharp beating today, extending their fall for the fifth straight session.