Swiggy's FTSE Inclusion: A Catalyst for Growth or a Head Fake?

As Swiggy Limited's inclusion in the FTSE Global Equity Index takes effect this June, investors are scrutinizing its implications for passive fund inflows, valuation dynamics, and long-term growth prospects. The move, which is expected to attract approximately $32 million in passive capital, underscores the growing recognition of India's foodtech sector as a strategic asset class. But with Swiggy trading at a market cap of ₹1.21 trillion ($14.6 billion)—up from ₹94,200 crores ($11 billion) in early 2025—questions arise: Is this stock undervalued or overhyped? Can index-driven demand sustain momentum, and do its growth engines justify the premium?

Valuation: A Premium for Growth, Not Profitability

Swiggy's valuation metrics paint a mixed picture. While its Price-to-Book (P/B) ratio of 9.5 suggests a premium to tangible assets, metrics tied to earnings—like P/E and EV/IBITDA—are not applicable due to persistent losses. The company reported a net loss of ₹625.5 crore in Q2 2025, though this marked a narrowing from the previous quarter. Analysts, however, argue that valuation should be framed through a growth lens, not profitability alone.

Swiggy's shares have risen 39% from their IPO price of ₹390, reaching a peak of ₹617 in June 2025, fueled by 39% YoY revenue growth to ₹3,600 crore in Q2. Morgan Stanley projects its food delivery segment to grow at a 15.8% CAGR through FY28, while its Quick Commerce (QC) division—a high-growth vertical—could expand at a 63% CAGR over the same period. These tailwinds justify the valuation, even as losses linger.

Near-Term Inflows: A Boost, but Not a Lifeline

The FTSE inclusion is a tactical tailwind, not a transformative event. Passive funds will rebalance portfolios to include Swiggy, but the $32 million inflow is modest relative to its market cap. Historically, index additions create short-term volatility, not sustained outperformance. However, the inclusion signals mainstream institutional acceptance, which could attract active investors to a stock that still trades at a 3.1x EV/Sales multiple—a discount to peers like Zomato.

Long-Term Catalysts: Dominance in Foodtech and QC

Swiggy's moat lies in its 43% market share in food delivery and its aggressive expansion into QC via Instamart. The latter segment, which now accounts for 12% of orders through its “Bolt” 10-minute delivery service, is critical. Analysts at IIFL Capital argue that QC could quadruple in size by FY28, turning Swiggy into a dual-growth platform. This diversification reduces reliance on a saturated food delivery market, where margins remain pressured due to competition with Zomato.

Risks: Execution and Profitability Lag

Despite the optimism, Swiggy faces hurdles. Its net loss narrowed to -16.3% EBIT margin in Q2, but breakeven remains distant. Competitors like Zomato have healthier margins, and Swiggy trails in order volume growth, relying instead on premium pricing. Regulatory risks—such as data privacy laws or antitrust scrutiny—are also lurking.

Investment Thesis: Buy with a Long View

Swiggy's stock is a high-risk, high-reward bet. The FTSE inclusion is a catalyst for near-term momentum, but investors must focus on long-term growth trajectories:
1. Valuation: The P/B ratio may be high, but it reflects Swiggy's scale and growth prospects. A re-rating is plausible if EBITDA turns positive by FY2027, as projected.
2. Execution: Monitor progress in QC (e.g., Bolt's adoption rate) and food delivery margins. A 10% EBITDA margin by FY2028 would validate the thesis.
3. Competition**: Zomato's dominance in delivery must be countered with Swiggy's QC edge and innovation.

Recommendation: Buy, but with a 3–5 year horizon. The stock's 50% upside potential (per IIFL's ₹535 target) aligns with growth expectations, provided Swiggy executes on QC and narrows losses. Short-term traders should avoid the volatility, as a backtest of buying on earnings announcement dates and holding for 20 days from November 2024 to June 2025 showed a significant loss of 30.87%, with a maximum drawdown of 32.5%. Patient investors may capitalize on a structural shift in India's on-demand economy.

Conclusion

Swiggy's FTSE inclusion is less about immediate gains and more about legitimizing its place in global equity portfolios. While the stock remains unprofitable, its market leadership, scalable growth drivers, and valuation discounts make it a compelling long-term play. For now, the jury is out—Swiggy's next move hinges on turning its delivery prowess into sustainable profitability.

Invest wisely, and keep an eye on the delivery trucks.