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Swiggy is expected to hold its market share in the food delivery and quick commerce segments despite rising competition in the sector, according to brokerage firm Bernstein which gave the company an ‘Outperform’ rating and a 25% upside in target price.

According to the report, Swiggy currently holds a 42% share of the food delivery market, which is expected to stabilise with better customer acquisition and innovative product features like Bolt and Swiggy One Lite.

The Indian food delivery market is only 8% penetrated, with a stable two-player market structure and a huge headroom for an increase in food delivery adoption among Indian consumers.

Earlier today, Swiggy started pilots with another food delivery app ‘Snacc‘ in select pincodes of Bengaluru.

The brokerage expects Swiggy to deliver a 90% Compound Annual Growth Rate (CAGR) in the medium term in quick commerce, driven by new categories like electronics and apparel, along with expansion in Tier II+ cities.

It expects the Sriharsha Majety-led company to hold its position as the second-largest player on the back of its aggressive dark store expansion strategy and growing user base.

“While there is a risk of competition, we expect Swiggy to be a leading player in Quick commerce led by its early mover advantage and dark store footprint,” stated the brokerage in a research note.

The brokerage sees the quick commerce segment as a market for more than “one winner” and it is poised to take share from organised retail, including ecommerce giants Amazon and Flipkart.

“Quick commerce is still emerging (less than 1% penetration) as a new growth engine with a larger TAM of $45 billion, expected to reach $77 billion by 2025, with a potential to disrupt the grocery and ecommerce market in metros and Tier I cities, driven by higher average order values and hyperlocalised stock keeping units (SKUs) with the ability to directly disrupt the mom-and-pop stores ecosystem in India dominating 95% of India’s grocery market,” stated the report.

The brokerage expects Swiggy’s going-out business, restaurant reservation platform Dineout and live events ticketing space Scenes, to grow at 22% CAGR till FY30.

Shares of the company closed 3.44$ lower at Rs 491 apiece on NSE.