Swiggy hits 52-week low as 83% shares exit lock-in; JM sees Rs 120 bn outflow risk.
Swiggy shares slid 6.4% to their 52-week low of Rs 300 on the BSE on Tuesday, May 13, as approximately 83% of the company’s shareholding became eligible for trade for the first time, according to a report by domestic brokerage firm JM Financial.
According to JM Financial, the lock-in period, which ended on May 12, has made this sizable portion of Swiggy’s shareholding tradable, raising concerns of potential selling pressure.
The influx of newly tradable shares raises the risk of large-scale offloading, as early investors and insiders may look to capitalize on their holdings. The expiry of Swiggy’s significant pre-IPO shareholder lock-in could trigger heightened volatility in the stock.
JM Financial had earlier estimated that even if just 15% of the locked-in shares are sold post-expiry, it could lead to outflows worth Rs 120 billion—nearly equivalent to the company’s total IPO size of Rs 113 billion.
Several pre-IPO investors, including private equity and venture capital firms, are sitting on significant unrealized gains. Although Swiggy shares are currently trading nearly 18% below the IPO price of Rs 390, some investors may still consider exiting.
“While we cannot accurately predict when these shareholders will exit, or whether they will even exit, it is pertinent to note that several of them are already sitting on significant unrealised gains,” the brokerage stated.
In its recent report following the company’s Q4 results, JM Financial reiterated its ‘Buy’ rating on the stock, though it revised the target price to Rs 450, down from Rs 500 earlier.
JM Financial noted that Swiggy’s Q4 performance was a tale of contrasting outcomes between its food delivery (FD) and Instamart (QC) businesses. While the company posted market-leading gross order value (GOV) growth of 17.6% YoY—slightly ahead of estimates—and strong margin gains in FD, Instamart’s GOV grew 101% YoY (versus an expected 110%), significantly lagging the market, with profitability declining more than anticipated.
Additionally, a sequential increase in ESOP costs led to a widening of Swiggy’s consolidated EBITDA loss to Rs 9.6 billion (versus an estimated loss of Rs 8.6 billion), up from Rs 7.3 billion in Q3.
That said, the brokerage added, “It appears QC growth investments have peaked in Q4, and profitability in the business could recover hereon, aided by improved store/warehouse utilization rates and operating leverage—though it may lead to further market share loss in FY26.”
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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The influx of newly tradable shares raises the risk of large-scale offloading, as early investors and insiders may look to capitalize on their holdings. The expiry of Swiggy’s significant pre-IPO shareholder lock-in could trigger heightened volatility in the stock.
JM Financial had earlier estimated that even if just 15% of the locked-in shares are sold post-expiry, it could lead to outflows worth Rs 120 billion—nearly equivalent to the company’s total IPO size of Rs 113 billion.
Several pre-IPO investors, including private equity and venture capital firms, are sitting on significant unrealized gains. Although Swiggy shares are currently trading nearly 18% below the IPO price of Rs 390, some investors may still consider exiting.
“While we cannot accurately predict when these shareholders will exit, or whether they will even exit, it is pertinent to note that several of them are already sitting on significant unrealised gains,” the brokerage stated.
In its recent report following the company’s Q4 results, JM Financial reiterated its ‘Buy’ rating on the stock, though it revised the target price to Rs 450, down from Rs 500 earlier.
JM Financial noted that Swiggy’s Q4 performance was a tale of contrasting outcomes between its food delivery (FD) and Instamart (QC) businesses. While the company posted market-leading gross order value (GOV) growth of 17.6% YoY—slightly ahead of estimates—and strong margin gains in FD, Instamart’s GOV grew 101% YoY (versus an expected 110%), significantly lagging the market, with profitability declining more than anticipated.
Additionally, a sequential increase in ESOP costs led to a widening of Swiggy’s consolidated EBITDA loss to Rs 9.6 billion (versus an estimated loss of Rs 8.6 billion), up from Rs 7.3 billion in Q3.
That said, the brokerage added, “It appears QC growth investments have peaked in Q4, and profitability in the business could recover hereon, aided by improved store/warehouse utilization rates and operating leverage—though it may lead to further market share loss in FY26.”
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
