Swiggy Ltd declined 6 per cent in Monday's trade, taking its five-day losing run to 22 per cent. The stock has been falling, as analysts have upped their loss estimates for the quick commerce business. They said there are initial signs that the execution gap is widening between Swiggy's Instamart and Zomato's Blinkit.
On Monday, the scrip fell 5.77 per cent to hit a low of Rs 359. This was the third session, out of a total five, when the stock plunged over 5 per cent. "While food delivery business remains stable; there are early signs that the execution variance in quick commerce is widening. We maintain our Reduce rating on Swiggy with a target price of Rs 455 per share," said HDFC Institutional Equities in a note.
The brokerage said Swiggy's quick commerce execution fell short of expectations and lagged Blinkit in Q3, as rising competition kept customer incentives, acquisition costs and dark store network investments elevated. It has revised its adjusted Ebitda losses estimates to Rs 1,580 crore in FY26 and Rs 1,230 crore in FY27 against Rs 1,440 crore (FY26) and Rs 1,030 crore (FY27) earlier.
UBS said Swiggy's Q3 results were below its expectations with quick commerce gross order value (GOV) growth and margins surprising negatively both against UBS estimates and in comparison to Zomato's performance.
"Food delivery segment performed better with GOV growth of 3.4 per cent QoQ and Ebitda margins of 2.5 per cent, both beating UBSe. Consolidated adjusted Ebitda loss of Rs 490 crore was almost 40 per cent worse than UBS estimated loss of Rs 360 crore. Management reiterated group level break-even targets, but acknowledged that competition in Q-com space is intense and margin pressure will continue in the next few quarters," it said.
This brokerage suggested a target price of Rs 515.
Elara Securities said while Swiggy does not expect such a sharp contribution margin (CM) loss going ahead and aims to turn CM positive by Q4CY25, the brokerage expects some volatility at adjusted Ebitda level.
"Instamart improved its average order value (AOV) to Rs 534 (up 7 per cent QoQ), but the gap was steady at 5 per cent versus Zomato. Active users rose 12.9 per cent QoQ to 7 million, lower than 19.1 per cent QoQ for Zomato, likely due to store additions towards Q3-end thus, user growth may accelerate ahead," it said.
This brokerage suggested a target price of Rs 300 for Swiggy.