Swiggy Could Follow Blinkit’s Inventory Playbook: Here’s What Brokerages CLSA Investec JM Financial Say

Swiggy Ltd. has moved a step closer to qualifying as an Indian Owned and Controlled Company, or IOCC, after its aggregate foreign investment fell below 50% for the first time. But brokerages caution that the transition is far from automatic and could take months.

Swiggy disclosed that foreign investment — including foreign portfolio investment, foreign direct investment and other indirect holdings — stood at 49.76% of its fully diluted equity capital as of July 6.

The change could eventually have major implications for Instamart. Under India’s foreign investment rules, foreign-funded e-commerce companies face restrictions on holding inventory. IOCC status could allow Swiggy to shift its quick-commerce business from a marketplace model to an inventory-led model, similar to Blinkit.

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CLSA said falling below the 50% foreign ownership threshold does not by itself change Swiggy’s status. The company must also establish domestic control. A previous attempt to amend its Articles of Association fell short of the required 75% shareholder approval, but CLSA believes Swiggy could try again.

If successful, an inventory-led model could give Instamart better supply-chain control and improve adjusted Ebitda margins, although working capital requirements would rise.

Investec, which maintained a ‘Hold’ rating with a target price of Rs 314, said IOCC status could meaningfully strengthen Swiggy’s assortment-led growth strategy and bring the business closer to profitability. It pointed to Blinkit, where the inventory model helped deliver an estimated 80-100 basis points of adjusted Ebitda margin expansion over two to three quarters.

JM Financial, however, remains cautious. It maintained a ‘Reduce’ rating with a Rs 250 target and said shareholder approvals and governance changes are still required. The brokerage does not expect IOCC status before the end of March 2027, potentially delaying Instamart’s inventory-led transition until April 2027.

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Brokerage Views

CLSA

• Foreign ownership falling below 50% does not automatically change Swiggy’s status to an Indian-owned and controlled company (IOCC).
• A previously proposed alteration failed to secure the required 75% shareholder approval.
• With foreign shareholding now below 50%, Swiggy may attempt to pass the resolution again.
• If approved, Swiggy’s quick-commerce business could shift from a marketplace to an inventory model, similar to Blinkit.
• The shift could improve supply-chain control and adjusted EBITDA margins, though working capital requirements would rise.

Investec

• Maintain Hold; Target Price: Rs 314.
• Domestic ownership has risen above 50% for the first time.
• However, the issue of control is yet to be addressed by the company.
• IOCC status allowed Blinkit to adopt an inventory model, improving assortment management and expanding adjusted EBITDA margins by 80-100 bps.
• This gave Blinkit a competitive advantage over Swiggy, Flipkart and Amazon.
• IOCC classification could strengthen Swiggy’s assortment-led growth strategy and move the business closer to profitability.

JM Financial

• Maintain Reduce; Target Price: Rs 250.
• Foreign shareholding is below 50%, but the transition to IOCC status could take time.
• Shareholder approval and governance changes are still required.
• Keeping foreign ownership below 50% without an adequate buffer could reduce Swiggy’s weight in global indices.
• Expects the IOCC transition to be delayed until after March 2027.
• This could push Instamart’s shift to an inventory-led model to April 2027.

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