Shares of Swiggy Ltd fell 4 per cent in Wednesday's trade, ahead of the company's December quarter results. The online food aggregator is expected to report a loss of Rs 609 crore for the December quarter, JM Financial said in its Q3 preview note. It sees sales for Swiggy rising 12.4 per cent sequentially to Rs 4,049 crore. Swiggy is seen reporting a negative Ebitda of Rs 574.20 crore, as per the brokerage.
Ahead of its earnings, Swiggy shares fell 4.35 per cent to hit a low of Rs 414.75. The stock is down 22.21 per cent in the past one month. A host of brokerages recently initiated coverage on the stock with 'Buy' ratings.
Kotak Institutional Equities this week suggested a fair value of Rs 500 on the Swiggy stock. Kotak is expecting Swiggy’s quick commerce business to post a rapid 63 per cent GMV CAGR and 74 per cent revenue CAGR over FY2025-28. The company recently accelerated its store addition target to 1,000 by March 2025, which can drive a healthy near-term revenue CAGR. This will, however, entail higher near-term investments, and Kotak expects the Ebitda loss to peak in FY2026, with full-year positive Ebitda only by FY2028.
"We expect Swiggy’s food delivery business to post GMV CAGR of 18.7 per cent over FY2025-28, driven by 15.5 per cent CAGR in orders and 2.8 per cent CAGR in AOV. Revenue CAGR of 19.1 per cent is higher on account of take-rate increase, driven by higher ad revenues and platform fees. We model a contribution margin (CM) of 8.3 per cent and an Ebitda margin of 4.5 per cent as a percentage of GMV by FY2028E," Kotak said.
HDFC Institutional Equities suspect that over FY25-27, with the benign competitive environment and settled market shares in food delivery space, both Swiggy and Zomato will focus on improving fixed cost absorption and hitting their 5 per cent of GOV target. "While Zomato is already quite efficient in fixed cost management (4 per cent of GOV), Swiggy is likely to catch up with the same (it has already managed to improve fixed cost absorption significantly as its fixed costs have come down to 5.3 per cent of GoV vs Zomato’s 4 per cent in H1FY25; 6 per cent of GoV in H1FY24)," it said.
Last month, ICICI Securities talked about the increased competitive intensity in quick commerce and said the path to profitability for all incumbents has been delayed.
But, on the flipside, it noted that the incumbents are swiftly expanding their dark store footprint and thus, fortifying the space against new entrants and keeping their medium-term outlook well-guarded.
"Alongside, Swiggy has demonstrated its execution prowess with ‘Swiggy Bolt’, a 10-minute food delivery offering, and ‘Swiggy BLCK’, a premium loyalty offering. We opine, these should help Swiggy increase market share in food delivery in the near term – evidenced by the incremental mind share noted in our survey data. Additionally, Swiggy offers a more reasonable valuation for each business segment compared to Zomato. We initiate coverage on Swiggy with BUY and a TP of Rs 740," it said on January 9.