Swiggy Shares Dip 4% as Anchor Lock-in Period Ends

Shares of Swiggy witnessed a decline of over 4 percent during early trading hours on December 11, reversing gains made the previous day as investors seized the opportunity to book profits. The drop came in the wake of the one-month lock-in period for anchor investors concluding today.

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With the expiration of the lock-in period, approximately 6.5 crore shares, equivalent to a 3 percent stake in the company, became available for trading. This development enables anchor investors to sell up to half of their holdings in the stock if they choose to. The remaining 50 percent of anchor-held shares will be eligible for trade after February 9.

It is important to clarify that while the end of the lock-in period allows shares to be traded, it does not necessarily imply that all of them will be sold.

Despite the dip, Swiggy’s stock has delivered significant returns, climbing 25 percent in under a month since its market debut. At 09:21 am, Swiggy share price were priced at ₹523.95 on the NSE. Even with today's decline, the stock still reflects a robust 21 percent gain from its listing price, offering ample opportunity for partial profit-taking.

Swiggy's recent market debut has shone a spotlight on the burgeoning quick commerce sector. CLSA has projected a sixfold growth in the Indian quick commerce industry between FY24 and FY27. Furthermore, CLSA believes this sector's expansive nature provides room for multiple players to coexist and flourish.

Many investors, who felt they missed out on Zomato's growth, have eagerly joined Swiggy's upward trajectory, drawn by its attractive valuations and potential for catching up with the industry leader.

In the previous trading session, Swiggy's shares rose by more than 1 percent after CLSA initiated coverage with a bullish 'outperform' rating and a target price of ₹708 per share, suggesting a potential upside of 32 percent from current levels.

"Swiggy holds considerable growth prospects, addressing a vast total addressable market (TAM) in both food delivery and quick commerce," remarked CLSA. The brokerage noted that with accelerating growth and improving profitability, Swiggy’s execution could strengthen significantly.

Although Swiggy trails behind Zomato in the food delivery market, CLSA pointed out that this is already factored into Swiggy's valuations. The company has successfully narrowed the gap with its larger competitor, signaling a stronger footing in the competitive landscape.

In the quick commerce arena, Swiggy's Instamart is competing with Zomato's Blinkit and rivals like Zepto by focusing on rapid delivery. To enhance its presence, Swiggy has been actively growing its network of dark stores to solidify its operations in this space.