Swiggy Share Price Recommendation: Why InstaMart Owner's Stock Hit All-Time Low After the IPO Lock-In Period?

Swiggy Share Price: The Instamart owner and a big rival of Zomato, Swiggy Ltd. faced sharp selling pressure on Tuesday, so much so that the stock touched an all-time low and dropped by 7.3%. Following the latest downfall, year-to-date, Swiggy's performance has nosedived by over 42.5%, which is far worse than the decline of 16% in its peer Eternal stock.

There are two reasons to why Swiggy stock is taking heavy beating from bears. Firstly, Swiggy's IPO lock-in period ended on May 12, which allows investors who bought the shares during the IPO period, to buy or sell in their portfolio.

Analysts are predicting Swiggy shares to be under pressure after the IPO lock-in period.

"Long-term investors can use these pressures, to build a sizeable position in Swiggy as, at CMP, the market seems to accord value to only its food delivery business, whereas Instamart and other businesses are not getting any meaningful value," JM Financials note said.

Secondly, Swiggy's strong performance in the food delivery segment was offset by InstaMart's slower-than-the-market performance, which soured the mood of investors. Swiggy shares have nosedived by nearly 13.6% since last week's trade.

Swiggy Share Price:

At the time of writing, Swiggy's stock price dropped by 3.3% to trade at Rs 309.90 apiece on BSE, with a market cap of Rs 77,278.12 crore. In the early trade, the new-age tech stock plunged by 7.3% to hit a new record low of Rs 297 apiece.

Swiggy's return on equity (ROE) is negative at 13.07% on BSE.

Swiggy IPO Lock-In Period:

The quick services company's stock came under pressure after its six-month IPO lock-in period ended on May 12. This lock-in period ended for non-promoters and pre-IPO shareholders.

Due to this, on May 13, traders could now exchange hands in much as 189.75 crore equity shares which accounted for about 83% of Swiggy's overall shareholding.

As per reports, Swiggy's shares in the lock-in are estimated to be approximately Rs 62,000 crore.

Data from BSE showed that on May 13, till 13:58 PM, about 2,40,73,561 equity shares were traded in Swiggy.

What Is the IPO Lock-In Period?

When a company goes public through an IPO, certain investors are restricted from selling their shares for a specific time, called the lock-in period. This period typically lasts six months but can extend up to a year, depending on the investor category and regulatory guidelines. The lock-in period aims to stabilize stock prices and reduce the risk of large-scale sell-offs immediately after the IPO listing. It ensures that major investors, especially promoters and anchor investors, hold their shares for a set duration, contributing to the long-term growth of the company, as per Bajaj Broking's website.

In general terms, the lock-in period is 6 months for IPOs, however, can be extended to 1 year depending upon the scenario.

Swiggy Q4 Results Review:

During Q4FY25, Swiggy's net loss widened to Rs 1,081,18 crore on a consolidated basis, compared to a net loss of Rs 554.77 crore in Q4FY24 and Rs 799.08 crore in Q3FY25. However, revenue from operations climbed to Rs 4,4100 crore in Q4FY25, as against Rs 3,045.55 crore in Q4FY24 and Rs 3,993.07 crore in Q3FY25.

Swiggy's 4Q results were once again a story of contrasting performances in food delivery (FD) vis-à-vis Instamart (QC) businesses. While it reported market-leading GOV growth of 17.6% YoY (a tad ahead of JMFe) alongside strong margin gains in FD, its GOV grew 101% YoY (JMFe of 110% YoY) in Instamart, meaningfully slower than the market with profitability deteriorating more than anticipated, as per analysts of JM Financial.

This, along with sequential increase in ESOP costs led to Consol. EBITDA loss expanding to INR 9.6bn (vs. JMFe loss of INR 8.6bn) from a loss of INR 7.3bn in 3Q. That said, it appears QC growth investments have peaked out in 4Q and profitability in the business could recover hereon aided by improvement in store/warehouse utilisation rates and operating leverage, albeit it could lead to further share loss in FY26. Overall, Consol. operating losses should contract henceforth as FD margin gains are also likely to continue, the analysts note said.

Swiggy Share Price Recommendation:

On the valuation, JM's note said, "Accordingly, our revised SOTP based Mar'26 TP works out to INR 450 vs. INR 500 earlier. While we see near-term pressures on the stock price, long-term investors can use these liquidity events to build a sizeable position in Swiggy as, at CMP, the market seems to accord value to only its food delivery business, whereas Instamart and other businesses are not getting any meaningful value. We maintain BUY."

On the other hand, analysts at Motilal Oswal in their note said, "We believe FD remains a stable duopoly; however, increased competition and aggressive dark store expansion have rebased profitability expectations for the QC sector in the near term. Despite this, our implied EV/GMV FY27e multiple for QC is at 0.4x, which we do not consider to be overly demanding, especially after the recent correction (the stock is down 47% from its peak). An acceleration in AOV and take rates in the medium term could prompt us to turn constructive on the stock."

Accordingly, Motilal's analyst said, "Swiggy is likely to report a PAT margin of -18.9%/-10.0% in FY26/FY27. Our profitability estimates for FY26/FY27 have been hit by intensive competition and dark store expansion. Our DCF-based valuation of INR340 suggests a 9% potential upside from CMP. We reiterate our Neutral rating on the stock."

About Swiggy Ltd:

Swiggy is a new-age consumer-first organization offering an easy-to-use convenience platform, accessible through a unified app.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.