Swiggy shares fell to Rs 264.55 on Wednesday, marking their lowest level since late July, as the company's market capitalisation dropped to Rs 77,813 crore. This decline follows shareholder approval to cap foreign ownership at 49.5%, aiming to achieve Indian-owned and controlled company status.
The company entered the NSDL red flag list on September 1, as foreign ownership approached the FPI limit. According to NSDL, foreign investors can now hold a maximum of 2.8 crore Swiggy shares. Jefferies noted that stocks are red-flagged when FPI holdings are within 3% of the limit.
Should the limit be breached, foreign investors must divest excess holdings within five trading days, selling only to domestic investors. This could lead to passive outflows of over $400 million from MSCI and FTSE indices, according to Jefferies.
Despite the share price drop, Jefferies maintains a 'Buy' call on Swiggy with a target price of Rs 435, indicating a 58% upside from the last closing price of Rs 275. The stock has fallen over 7% in a week and 32% in 2026 so far, with a 37% decline over the past year.
The move to cap foreign ownership supports Swiggy's plan for a 1P model at Instamart, potentially driving an 80 bps margin upside. The company is expected to swiftly implement the necessary changes, which may take 2-3 weeks.
Background
Swiggy's strategic move to cap foreign ownership aligns with its broader goal of becoming an Indian-owned entity, a status that could bolster its domestic operations and market positioning.
Investors should monitor Swiggy's progress in implementing these changes and the impact on its stock inclusion in major indices. The company's strategic shift may influence its market performance in the coming months.
