Swiggy shares may face pressure as May 12 lock-in ends; JM Financial retains ‘Buy’ ratings

Shares of Swiggy are bracing for a potential sell-off as the anchor lock-in period for its pre-IPO investors ends on May 12. According to brokerage JM Financial, this expiry could unlock nearly 83 per cent of the company’s shareholding, currently valued at approximately Rs 660 billion posing a major supply overhang for the market.

Rs 660 bn worth of shares to become tradable

JM Financial’s estimates suggest that foreign direct investors (FDIs) account for around Rs 509 billion of the locked-in value. Among the largest shareholders are Prosus and SoftBank, holding Rs 202 billion and Rs 60 billion respectively. While it is uncertain how many of these shares will be offloaded, JM Financial warned that if just 15 per cent of the unlocked shares hit the market, it could lead to an outflow of nearly Rs 120 billion—more than 6 per cent above Swiggy’s total IPO size.

Stock 12% below IPO price; comparisons drawn to Eternal, Nykaa

Swiggy, which listed in November 2024, is already trading at a 12 per cent discount to its IPO price of Rs 390 and over 18 per cent below its NSE listing price. The stock hit a lifetime high of Rs 617.30 in December last year but has since declined, touching a record low of Rs 306.95 earlier this April.

JM Financial drew comparisons to other tech IPOs like Eternal and Nykaa, both of which fell sharply 23 per cent and 13 per cent respectively after their lock-ins expired.

Instamart remains key to long-term upside

Despite near-term pressures, JM Financial has maintained a ‘buy’ call on the stock with a target price of Rs 500. It believes Swiggy’s quick commerce vertical, Instamart, deserves stronger valuation recognition despite a longer break-even timeline. JM expects Instamart to deliver 25 per cent sequential GOV growth in Q4.

Overall, Swiggy’s net loss is projected to widen to Rs 9.27 billion in the March quarter, up from Rs 8.03 billion in Q3. While volatility looms, long-term investors are advised to use any sharp correction as an entry point.