3 reasons why Nomura raised its target price on Swiggy to ₹560; check here

Don't want to miss the best from Business Standard?

Nomura on Swiggy: Japan-based brokerage firm Nomura has raised its target price on Swiggy to ₹560 from ₹550 earlier while retaining its ‘Buy’ rating, pointing to strong momentum in the company’s food delivery operations, a planned fund-raise to strengthen its quick commerce business, and improving visibility on profitability. The new target implies a potential 34 per cent upside from current levels.

 

“We maintain our ‘Buy’ rating and raise SOTP-based TP marginally to ₹560 (from ₹550 earlier). In our view, disciplined execution and improving visibility on breakeven will be key catalysts for the stock to do well from here,” said Abhishek Bhandari and Karan Nain of Nomura, in a note dated October 31, 2025.

Meanwhile, here are the top three reasons behind the target price hike:

Strong growth in food delivery business

 

Swiggy’s food delivery (FD) arm continued its solid performance in the September quarter (Q2FY26), driven by sustained order growth and operational efficiency. The company’s gross order value (GOV) rose 6 per cent quarter-on-quarter (Q-o-Q) and 19 per cent year-on-year (Y-o-Y), in line with Nomura’s expectations and ahead of Zomato’s 18 per cent Y-o-Y growth in the same period. Monthly transacting users (MTU) climbed 5.7 per cent sequentially to 17.2 million, reflecting improving engagement on the platform.

 

The take rate, including delivery charges, inched up 10 basis points (bps) Q-o-Q to 25.8 per cent, while contribution margin (CM) remained steady at 7.3 per cent, despite competitive pressures such as lower subscription fees and reduced minimum order values. Adjusted Ebitda margin, as a percentage of GOV, improved 44 basis points Q-o-Q to 2.8 per cent. Nomura highlighted that Swiggy’s difference between GOV and net order value (NOV) growth was only around 0.5 per cent, compared to Zomato’s ~4 per cent gap, suggesting better pricing and volume alignment.

 

Nomura expects Swiggy’s FD segment to maintain its momentum, projecting 19-20 per cent Y-o-Y growth in GOV over FY26–27, with contribution margins expanding modestly to 7.5-7.7 per cent. This sustained growth trajectory, coupled with operational discipline, underpins analysts’ confidence in Swiggy’s long-term value creation potential.  ALSO READ | Earnings steady, valuations cheap: NTPC remains Nuvama's top power play

Fund-raising to strengthen quick commerce business

 

Swiggy’s management has announced plans to raise around ₹10,000 crore to bolster its quick commerce (QC) arm, a segment that continues to face heightened competition. 

 

Nomura noted that the company’s fund-raising efforts are timely, given the dynamic nature of the QC space and peers’ aggressive capital deployment. 

 

Rival Zepto recently secured $450 million in new funding, while Zomato’s Blinkit holds about ₹20,000 crore in cash reserves. Strengthening the balance sheet through this capital infusion will boost Swiggy’s ability to invest in growth, logistics, and technology while sustaining its competitive positioning.

Better visibility on profitability

 

Nomura believes disciplined execution, operational efficiency, and a clearer path toward breakeven are key catalysts for Swiggy’s stock performance in the coming quarters. 

 

The brokerage stressed that improving contribution margins and a gradual ramp-up in QC economics provide better visibility on profitability. 

 

However, Nomura also flagged risks such as intensified competition in the QC business and a potential macroeconomic slowdown that could temper order growth in the online food delivery segment.