Buy Swiggy Ltd for the Target Rs 350 by Emkay Global Financial Services Ltd
We attended Swiggy’s Capital Markets Day 2026, where the company outlined its FY31 vision to build a Rs100bn adj EBITDA business. Key highlights: 1) Food Delivery GOV is expected to grow 2.5-3.5x (25-30% CAGR), adding Rs50bn adj EBITDA, driven by Toing and other affordability-led initiatives. 2) Quick Commerce (QCom) GOV is expected to scale up 4-5x (~40% CAGR) and could add Rs40bn adj EBITDA. 3) Out-of-Home Consumption (OOH) business is expected to grow 5x and add Rs10bn adj EBITDA. Swiggy’s adj EBITDA target is ~2x our expectation (Rs54bn), and would require significant execution rigor, especially in the loss-making QCom and Toing businesses. We see green shoots in the QCom business – July scale-up was stronger than in last 6 months combined. We believe that scale-up in the QCom business and measured losses in the Toing business would drive a stock rerating. We maintain BUY and DCFbased TP of Rs350.
Toing to expand the market, albeit at low profitability
The management believes that Toing will unlock new/dormant users as ~70% users transact less than once a month, with affordability being the biggest barrier. Toing’s platform is built specifically for the Gen Z cohort—college students and early jobbers. Monetization would be from flat consumer fees, higher ad placements, and low restaurant take rates. On the cost side, the company plans to keep shorter last miles (average: ~2km) and higher batching on a slower network. The management is seeing strong consumer retention and repeat behavior, with 2 of 3 users being new and dormant. While we believe that there is a use case for such a platform, the company will have to meticulously manage costs to attain profitability in this business.
QCom: Growth to accelerate
Swiggy is in the process of transitioning to the inventory ownership model and is expected to transition fully in 2-4 quarters, adding 60-80bps to margins. Through its journey to achieve contribution margin (CM) breakeven, the company has weeded out low-quality orders/consumers. This was dragging down growth and, hence, it would see strong growth acceleration in the ensuing quarter. Through its ‘Switch’ proposition, the company is powering assortment-led differentiation through brand partnerships and own brands – Noice (FMCG) and Nectr (FnV). Noice is seeing good traction, with 1 in 10 basket penetration, 10pp higher retention, and 1.5x order frequency versus platform average
Outlook and valuations – QCom optionality riding on Food Delivery annuity
We see Swiggy as a strong food delivery franchise, with optionality to extend scale in the QCom business. We maintain BUY on the stock and DCF-based TP of Rs350. We value Swiggy’s Food Delivery business at Rs573bn (Rs208/share), which implies 31.6x EV/adj EBITDA on FY28E food delivery adj EBITDA. We value its QCom business at Rs180bn (Rs65/share), implying 0.54x EV/NOV on FY28E QCom NOV.
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