Shares of Swiggy Ltd nearly 7 per cent in Wednesday's trade after the online food aggregator and delivery platform reported better-than-expected revenue growth for the September quarter. Swiggy's Q2 revenue of Rs 3,601.45 crore beat the consensus estimate of Rs 3,540 crore while its reported losses at Rs 630 crore were largely in line with an estimate of Rs 640 crore. MOFSL sees upside capped for Swiggy, as it suggested a 'Neutral' rating on the stock. JM Financial finds the stock worth Rs 550 apiece.
The Swiggy management guided to turn quick commerce break-even by Q2FY27 and become consolidated adjusted Ebitda positive by Q3FY26. "While we remain circumspect in our forecasts, laying out tough goals for itself is commendable. In our SOTP valuation, we raise our GOV target multiple for Instamart due to sharp improvement in the business growth profile as well as contribution profitability. Maintain Buy on Swiggy with a revised March 2026 target price of Rs 550," it said.
Swiggy shares rose 6.76 per cent to hit a high of Rs 534.85. At this price, the stock was 1.36 per cent away from a high Rs 542.10 it hit in the previous session.
"Swiggy, through its innovation DNA, has played a pivotal role in effectively inventing both food delivery and quick commerce, leading the way in these categories. However, it has seen a decline in its lead in food delivery and is currently trailing behind its key rival, Blinkit, in quick commerce — both in terms of GOV growth and profitability. While the Q-commerce race is only getting started, Swiggy’s re-rating depends on accelerating GOV growth, increasing AOVs, and improving execution in the Q-commerce business," MOFSL said.
Swiggy’s gross order value (GOV) growth in Food Delivery (FD) and Quick Commerce (QC) segments were lower than Zomato’s for H1FY25, indicating further market share loss during the last six months, another brokerage Nuvama said.
MOFSL expects Swiggy's food delivery orders to grow at 12.5 per cent annually with an AOV growth of 1.4 per cent, leading to a GOV growth of 14.1 per cent over FY24-37. Quick commerce is expected to grow faster, with orders increasing at 23.6 per cent annually, AOV growth at 3.2 per cent and GOV growth at 27.6 per cent.
"Swiggy is expected to report PAT margin of -16.1%/-3.9%/1.8% in FY25/FY26/FY27. Our adjusted Ebitda remains unchanged; however, PAT has been impacted by increased ESOP expenses. Our DCF-based valuation of Rs 475. We reiterate our Neutral rating on the stock," MOFSL said.
Nuvama did not rate Swiggy but said the company plans to more than double its active dark store area to 4 million square feet (msf) by March 2025 against 1.5 msf in March 2024 by doubling the store count and increasing the store size.
This strategic expansion is aimed at strengthening Swiggy’s market presence and meeting burgeoning consumer demand, it said.
Elara Securities said it continues to believe that scale discount of 30-35 per cent in business and valuation multiple discount of 20 per cent may remain for Swiggy despite better execution, as quick commerce losses continue to be high at Rs 360 crore in Q2FY25.
"Per guidance, it may take another two years to achieve break-even at the adjusted Ebitda level, compared with Blinkit (at break-even point). The key monitorable is visibility as regards posting break-even in quick commerce in a highly competitive environment (given the entry of large ecommerce players). Based on SoTP (December 2026E), Zomato’s target valuation is pegged at $34 billion, and Swiggy’s market cap in best-case scenario may move to $15 billion (55 per cent discount to Zomato) due to a big gap in valuations for quick-commerce verticals and revenue scale of both food and quick commerce segments. We do not have a rating on Swiggy," Elara said. This brokerage does not have any rating for Swiggy.
MOFSL said while it is enthused by Swiggy's aggressive approach to expanding its SKU range— tripling the selection in its dark stores over the past year and planning to house up to 20,000 SKUs in larger stores—there are a few concerns.
It said the introduction of mega pods, with an extended capacity of over 50,000 SKUs, could potentially compromise the 10-minute delivery promise, a critical marker in competing against Blinkit and Zepto. Maintaining ultra-fast delivery times amidst such expansions will be a key challenge for Swiggy's Instamart.
"Too early to decide the winners in Q-commerce: That said, we believe it is too early to decide the winners in the Q-commerce race. We will monitor Swiggy’s AOV and take rates for quick commerce to gauge the success of its strategy," it said.