Zomato, Swiggy shares can jump up to 127%, says ICICI Securities

Swiggy share price has the potential to more than double, while Zomato share price can jump nearly 40% from current levels, according to ICICI Securities’ latest report on these quick commerce stocks.

Swiggy shares spiked as much as 7.72% to ₹351.60 apiece, while Zomato share price gained 3.42% to ₹229.65 apiece on the BSE Tuesday.

ICICI Securities reiterated its ‘Buy’ rating on Swiggy shares with a target price of ₹740 per share, implying an upside potential of 127% from Monday’s closing price. As per its SoTP-based methodology, the food delivery segment is valued at ₹99,800 crore, while the quick commerce segment is valued at ₹42,800 crore and cash balance is ₹9,000 crore.

The brokerage has also reiterated its ‘Buy’ call on Zomato shares, with a target price of ₹310 apiece, an upside potential of 40%. It values the food delivery segment at ₹1.6 lakh crore, the quick commerce segment at ₹96,600 crore and cash balance is ₹18,000 crore.

Swiggy and Zomato shares have corrected around 32% and 21% over the last three months given concerns around increasing cash burns in Quick commerce (QC). This was mostly on account of higher discounting by Zepto as it was looking to increase market share post accelerated store expansion.

“We think, however, that these concerns have been over-baked into the stock prices for both Swiggy and Zomato. We think Swiggy (consolidated) is now trading at an ~30% discount to par value for the food delivery business, implying negative value for the optionality of success in QC. Zomato on the other hand is trading at a value that ascribes nothing to QC,” ICICI Securities said in a report.

The brokerage firm thinks this anomaly is unlikely to sustain long especially given a robust outlook for discretionary consumption from May 2025.

Food Delivery: Overlooked Amid Quick Commerce Frenzy

According to ICICI Securities, investor focus on quick commerce has overshadowed food delivery, despite its profitable scale-up over the past two years. While Q3FY25 saw some slowdown, structural growth remains intact. Historical data shows a rise in consumption following major tax cuts (FY06, FY11, FY13, FY14).

With income tax cuts in the FY26 Union Budget, middle-class spending is set to rise, benefiting hyperlocal e-commerce — particularly food delivery, given its discretionary nature.

Quick Commerce: Challenges Persist, But Outlook Improves

Rising cash burn has led to sharp valuation discounts in quick commerce. However, ICICI Securities said its checks across top metro locations suggest peak item-level discounting (Nov’24-Jan’25) has eased, shifting towards cart-level incentives. Platforms have also reduced performance marketing spend, which could improve EBITDA contribution.

While near-term margin improvements remain uncertain, long-term valuations appear attractive for investors with a horizon of over a year, it said.

At 2:05 PM, Zomato shares were trading 1.33% higher at ₹225.00 apiece, while Swiggy shares were trading 6.63% higher at ₹348.05 apiece on the BSE.

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 making any investment decisions.