Bengaluru-based online food ordering and delivery company, Swiggy is well-positioned for steady growth amid a turnaround in its food delivery business, rising Instamart AOV, and a pause in dark store expansion, said Motilal Oswal in its latest note.

The brokerage, which had upgraded Swiggy to ‘buy’ earlier in September with a target price of ₹550 per share, highlighted multiple tailwinds that position the company to enter a phase of profitability. The target price indicates an upside rise of 26.50% from the stock’s latest closing price of ₹434.80 apiece.

A buffet of tailwinds

Motilal Oswal said that the food delivery business, which had slowed in the past few quarters due to subdued consumer sentiment and broader macroeconomic pressures, is now bottoming out.

The brokerage believes that festive season tailwinds, along with recent GST reforms, are likely to support a recovery in discretionary spending, boosting order frequency and value across platforms.

The company has also strengthened its food delivery segment with offerings such as Bolt (10-minute meals), Snacc (snack meals), and ’99 Store’ (affordable, fast-prep options). According to the brokerage, these initiatives are helping Swiggy expand its monthly transacting user (MTU) base and defend its market position.

The 10-minute delivery service has emerged as a key differentiator, with Eternal’s exit from the segment giving Swiggy a clear opportunity to innovate and capture market share in the quick food delivery space.

In the Quick Commerce segment, Motilal Oswal noted that competitive intensity is easing as new entrants struggle to scale operations, and the company had slowed dark store expansion after reaching a peak in 4QFY25.

Swiggy’s strategy of optimizing its existing infrastructure while selectively adding new dark stores to strengthen coverage positions it well for steady growth and contribution margin expansion in the coming quarters.

“With 4.3m sqft of network capacity across 1,000+ dark stores, Swiggy has paused further expansion, focusing on improving utilization and throughput. This footprint can support up to 100% YoY GOV growth and accelerate margin expansion, aided by operating leverage and reduced fixed costs,” said brokerage.

Motilal remains constructive on the sector recovery and now expects FD GOV growth to accelerate beyond 20–21% over the next 2–4 quarters, with QC adoption strengthening further in non-metro markets, aided by GST-led formalization.

Swiggy share price trend

The company’s shares made a strong rebound in May and have maintained the momentum, closing in the green each subsequent month. This has resulted in a 46% recovery, although the shares are still down 29% from their all-time high of ₹617.30 apiece, recorded in December 2024.

Last week, global brokerage firm Citi raised its target price on the stock to ₹495 from ₹465, while maintaining its Buy rating.

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