The euphoria around Swiggy’s highly anticipated Initial Public Offering (IPO) has evaporated faster than a drop of water on a hot tawa. Just days after its listing, the food delivery giant's stock is facing severe headwinds, with prominent brokerage firms initiating coverage with aggressive "Sell" ratings and price targets significantly below the listing price.

While the company managed to raise funds successfully, the public market’s scrutiny has exposed deep fissures in its business model, particularly in its battle against arch-rival Zomato. Here is why analysts are sounding the alarm on Swiggy’s valuation.

1. The "Blinkit" Problem: Losing the Quick Commerce War The biggest thorn in Swiggy's side is Zomato’s quick commerce arm, Blinkit.

Market Share Erosion: Analysts point out that Blinkit has successfully established itself as the market leader in the hyper-competitive 10-minute delivery space. It is growing faster, executing better, and capturing a larger share of the high-frequency grocery and essentials market.

Swiggy Instamart Lagging: Swiggy’s own quick commerce offering, Instamart, is seen as playing catch-up. Despite early mover advantage, it has yielded ground to Blinkit’s relentless execution and Zomato's superior cross-selling strategies. The fear is that Swiggy is fighting a losing battle in a sector that is critical for future growth.

2. The "Cash Burn" Dilemma & Path to Profitability While Zomato has shown a clear path to profitability and has even posted consecutive quarters of profit, Swiggy’s bottom line remains stained with red ink.

Indefinite Burn: To fight Blinkit and enter new categories, Swiggy needs to continue burning massive amounts of cash on customer acquisition, discounts, and logistics infrastructure. Analysts are sceptical about when this burn will end. The IPO funds provide a runway, but not a solution to the underlying profitability challenge.

Negative Line Items: Key metrics like contribution margin and EBITDA are still under pressure, raising concerns about the sustainability of its business model in a high-interest-rate environment where investors demand profits, not just growth.

3. Valuation Disconnect the primary argument from bears is that Swiggy’s IPO valuation was too rich compared to its fundamentals.

The Zomato Premium: Zomato commands a premium valuation because it is a proven market leader with a profitable core business and a rapidly growing, market-leading quick commerce arm. Analysts argue that Swiggy, being the second player with weaker financials, should trade at a significant discount to Zomato. The current valuation does not fully reflect this "second place" reality.

The Road Ahead for Swiggy to prove the naysayers wrong, it needs to execute a flawless turnaround. It must arrest its market share loss in quick commerce, show a credible and accelerated timeline to profitability, and demonstrate that it can innovate beyond just being a "me-too" player. Until then, the stock is likely to remain under pressure as the market recalibrates its expectations from hype to reality. The honeymoon period is officially over.