Swiggy’s foreign ownership falls below 50%
Swiggy this week announced that domestic ownership had crossed the 50% mark. In an exchange filing, Swiggy said as of July 6, the “aggregate foreign investment in Swiggy Limited including foreign portfolio investment, foreign direct investment and other indirect foreign investment stands at approximately 49.76% of the total paid-up equity share capital of the Company on a fully diluted basis, as per data available from the designated depository.”
Swiggy clarified that this by itself does not result in any changes to the ownership or control status of the company, nor does it have any impact on the share capital, management, business operations, voting rights or rights attached to the equity shares.This comes after Swiggy shareholders in May failed to pass a resolution to classify it as an Indian-owned and controlled company (IOCC), a status that would let its quick commerce arm Instamart own inventory directly, improving margins and supply chain control.
Under India’s current Foreign Exchange Management Act (FEMA) provisions, a company can qualify as an IOCC only if both ownership and control rest with resident Indian citizens or eligible Indian entities, including through a board composition and nomination framework that supports domestic control.
Also read: Swiggy shares jump as foreign ownership falls below 50%. What this means quick commerce giant?
IOCC status would allow Instamart to operate with fewer restrictions under India’s FDI policies and allow it to own its inventory, like Blinkit, the market leader.
What lies ahead for Eternal?
Motilal Oswal in a recent report said that the food delivery business which had witnessed a slowdown earlier has now accelerated in the third quarter. “The improvement is being driven by targeted activation of budget-conscious customers and curated affordable meal offerings (e.g. meals under Rs 250). While NAOV has moderated, higher order frequency and new customer additions are driving volume growth. We continue to view FD as a stable duopoly and expect growth to remain in the range of ~18-20% over the medium term,” it said.According to the domestic brokerage, quick commerce remains the bigger story. In this space, competition is intense and growth has moderated from the exceptional pace of the last two years, with FY27 estimates now down to around 70% YoY growth (vs 85-100% earlier). Despite this, Blinkit’s position continues to strengthen, Motilal said, highlighting attractive valuations.
While Eternal and Swiggy investors worry about Amazon and Flipkart’s entry into India’s tight spaced quick commerce segment, analysts at Anand Rathi believe that Blinkit is the undisputed market leader that is structurally well-positioned in this space to handle the heat.
In its note on quick commerce released earlier this month, Anand Rathi highlighted that Blinkit’s market leadership is likely to be maintained on the back of clear scale advantage with strong customer retention without relying on heavy discounts. The domestic brokerage maintained its ‘Buy’ rating on the shares of Eternal with a target price of Rs 400 apiece. For Swiggy, Anand Rathi has a ‘Hold’ call with a target price of Rs 310 apiece.
Also read: Blinkit to remain undisputed market leader despite Amazon, Flipkart’s QC entry, says Anand Rathi
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
