Swiggy Ltd reported a widening of losses in the December quarter on intensifying competition in the quick commerce space, sending its shares tumbling 7 per cent in Thursday's trade. The stock hit a sub-Rs 400 level of Rs 387, as analysts warned of a drag on quick commerce profit amid strong expansion plans.
Swiggy’s Q3 revenue came in at Rs 3,993 crore, in line with the consensus estimate of Rs 4,020 crore. But the reported loss at Rs 799 crore was higher than the consensus estimate of Rs 620 crore.
"Swiggy delivered in line growth, but margins were significantly below consensus. Instamart's adjusted Ebitda margin fell 420 bps QoQ while the contribution margin (CM) fell 270 bps QoQ. The CM decline was partially due to dark store additions, though the magnitude of the miss suggests CM of existing stores also posted a compression. Dark store expansion accelerated in the second half of the quarter and picked up further in January, creating a headwind for Q4," Nuvama said.
MOFSL said the food delivery segment remains a stable duopoly, but increased competition and aggressive dark store expansion have rebased profitability expectations for the quick commerce sector in the near term.
"Despite this, our implied EV/GMV FY27e multiple for QC is at 0.7 times, which we do not consider to be overly demanding, especially after the recent correction (the stock is down 30 per cent from its peak). An acceleration in AOV and take rates, and a possible stock correction after these results could prompt us to turn constructive on the stock," MOFSL said.
On Thursday, Swiggy shares fell 7.43 per cent to hit a low of Rs 387. With this, the stock is down 25 per cent in 2025 so far. MOFSL said Swiggy is likely to report a PAT margin of minus 19.5 per cent in FY25, minus 11.4 per cent in FY26 and minus 5.4 per cent in FY27. Its profitability estimates have been hit by aggressive dark store expansion.
"Our DCF-based valuation of Rs 460 suggests a 10 per cent potential upside from CMP. We reiterate our Neutral rating on the stock," it said.
ICICI Securities maintained his 'Buy' on Swiggy with three-stage DCF-based target price of Rs 740. "Contribution margin declined 270 bps QoQ in QC for Instamart vs 80bps decline for Blinkit. While this seems starkly worse, pre-contribution expenses per sq ft in Instamart have increased 8.6 per centQoQ which is understandable given it has increased city count from 54 to 84," it said.