Shares of foodtech company Swiggy surged nearly 5% to an intraday high of ₹285.35 on the BSE today after shareholders approved a 49.5% cap on aggregate foreign ownership. The stock later traded 3.4% higher at ₹280.30, valuing the company at ₹77,385.3 crore ($8.1 billion), according to inc42.com.
The brokerage firm Jefferies initiated a 'Buy' rating on Swiggy with a target price of ₹435 per share, indicating a 60% upside from the last closing price. Jefferies noted that the foreign ownership cap moves Swiggy closer to becoming an Indian-owned and controlled company, supporting its plan to transition Instamart to a first-party, inventory-led model. This shift could yield around 80 basis points of margin improvement for the quick commerce business, the brokerage said.
The approval of the foreign ownership cap is significant as it mitigates potential regulatory risks despite current quick commerce models being compliant. Jefferies highlighted that while passive outflows might occur once the new framework is implemented, it could take a few weeks for these effects to materialize. The move aligns with Swiggy's strategic efforts to strengthen its market position in the competitive foodtech sector.
More than 99.9% of Swiggy shareholders voted in favor of the foreign ownership cap on Tuesday, according to inc42.com. This shareholder approval marks a key milestone in the company’s governance and operational strategy.