Brokerage firm JM Financial has maintained its 'Reduce' rating on food and grocery delivery platform Swiggy with an unchanged 12-month target price of Rs 250, saying the company's transition to an Indian-Owned-and-Controlled Company (IOCC) is likely to take longer than expected despite its foreign shareholding falling below the 50% threshold.

Under the brokerage's rating framework, a 'Reduce' recommendation indicates an expected return between negative 10% and positive 5%.

According to the brokerage, Swiggy's aggregate foreign shareholding fell to 49.76% as of July 6, the first time it dropped below the 50% threshold. However, this alone does not qualify the company as an IOCC under FEMA regulations.

JM Financial said Swiggy will also have to complete governance-related changes, including demonstrating that ownership and control rest with resident Indian citizens or entities. These changes may require board restructuring, amendments to voting rights and shareholder approvals.

The brokerage believes IOCC eligibility is assessed based on ownership and control as of March 31 of the previous financial year. As a result, even if Swiggy completes the required governance changes over the coming months, it is unlikely to attain IOCC status before the end of March 2027. This would delay Instamart's shift to an inventory-led model until April 2027 at the earliest.

JM Financial said an inventory-led model would allow Instamart to procure directly from brands, expand product assortment, introduce private labels and negotiate better commercial terms. The company's management had earlier indicated that the transition could improve adjusted EBITDA margins by 50–70 basis points.

The brokerage also warned that capping foreign ownership below 50% without creating sufficient headroom for overseas investors could reduce JM Financial warned that a foreign ownership cap below 50% could reduce Swiggy's global index weight. It cited Eternal, whose weight was halved by MSCI after it capped foreign ownership at 49.5% in May 2025, before being restored in February 2026.

JM Financial retained its target price of Rs 250, valuing Swiggy's food delivery business at 35x adjusted EBITDA and its out-of-home segment (Dineout) at 25x EV/adjusted EBITDA. The brokerage continues to assign zero value to Instamart, supply chain and platform innovation businesses due to limited visibility on profitability. It also excluded Swiggy's cash balance of around Rs 1,500 crore from its valuation, saying continued losses would gradually erode the reserves.

As of 2:07 PM (today), Swiggy’s share is trading at around Rs 263 on NSE with a total market capitalization of Rs 72,665 crore.