In its first post-IPO results on Tuesday, Swiggy is expected to report an improving trend in most key operating metrics, with losses likely to narrow in the September quarter on a sequential basis. Revenue growth is seen at around 6 per cent.
In food delivery, the company is likely to deliver 6 per cent sequential growth in the September quarter, marginally better than 5 per cent delivered by Zomato, aided by growing traction for its co-branded credit card with HDFC Bank, JM Financial said.
The domestic brokerage said the segment profitability's is likely to improve meaningfully to 1.8 per cent as percentage of gross order value (GOV) against 0.8 per cent in Q1, on the back of lower platform discounts and operating leverage benefits.
Ahead of its quarterly results, Swiggy shares were trading 3.21 per cent higher at Rs 510.80.
"While in Quick Commerce (Instamart), we forecast GOV growth of 15 per cent QoQ against 25 per cent delivered by Zomato’s Blinkit, losses at contribution margin level could come down to -1.7 per cent against -3.2 per cent in Q1, driven by an uptick in take-rates and dark store and warehousing level operating leverage," it said.
At a consolidated level, adjusted Ebitda loss is seen subsiding to Rs 270 crore against Rs 350 crore in Q1, JM said adding that investors must focus on the company’s relative performance against Zomato and the management commentary on profitability improvement in food delivery and quick commerce businesses.
"We forecast sequential GOV growth of 6 per cent in Q2 on the back of 5 per cent order volume growth. We see MTUs growing to 14.4 million versus 14 million in 1QFY25, whereas ordering frequency and AOV’s could grow 3 per cent/1 per cent QoQ, respectively. Gross take-rates are likely to be sequentially flat at 25.3 per cent in Q2," JM Financial said.
As a result, sequential reported revenue growth would also be in line with GOV growth of 6 per cent. JM expects contribution margin as percentage of GOV to expand to 7 per cent in Q2 from 6.4 per cent in Q1, mainly on account of lower platform discounts. Adjusted Ebitda margin as percentage of GOV can expand 100 bps sequentially to 1.8 per cent from 0.8 per cent in Q1, aided by operating leverage.
"Reported Ebitda loss can come down to Rs 460 crore from Rs 540 crore. Overall, PAT level losses are also expected to narrow to Rs 480 crore from Rs 600 crore in 1QFY25," JM Financial said.