Swiggy’s stock witnessed a significant decline of 8% before closing 7% lower on Thursday following the announcement of a loss of ₹799 crore in the quarter ending December 2024, compared to ₹574.3 crore in the same quarter the previous year. Despite this, the company’s revenue from operations saw a 31% increase to ₹3993.1 crore from ₹3048.6 crore in the corresponding quarter.
Various brokerages have maintained their positions with revised target prices, highlighting concerns such as the aggressive expansion of dark stores and increased competitive pressures impacting margins in the upcoming quarter. JM Financial reiterated its buy rating with a reduced target price of ₹500, citing weak operating performance in the third quarter due to escalating losses in the quick commerce segment, overshadowing improvements in the food delivery segment.
Motilal Oswal also maintained a neutral rating with a lowered target price of ₹460, noting that while the food delivery business remains a stable duopoly, intensified competition and rapid dark store expansion have lowered profitability expectations for the quick commerce sector. The brokerage mentioned that Swiggy’s introduction of Bolt and 10-minute food delivery could potentially lead to slower average order value growth, but welcomed the competition it brings to the food delivery space.
Nuvama Institutional Equities expressed concerns about the accelerated expansion of dark stores in the latter part of the quarter and into January, posing challenges for the upcoming quarter. Macquarie, on the other hand, reiterated their underperform rating on Swiggy with a target price of ₹325, attributing margin impacts to network expansion and competitive pressures, and stating a preference for Zomato over Swiggy due to expected prolonged hyper-competition.
UBS, however, maintained a buy rating with a target price of ₹515, noting that Swiggy has not announced plans for dark store expansion like its competitor Zomato. Bernstein retained an outperform rating with a target price of ₹575.
Following the initial dip to ₹385.25 on the NSE, Swiggy’s stock rebounded slightly to close at ₹391.75, a decrease of 6.29%. On the BSE, the stock closed below its listing price at ₹388.90. Meanwhile, Zomato’s shares closed flat at ₹229.90 on the NSE.
In comparison, Zomato reported a 57% decline in consolidated net profit for the December quarter by the end of January 2025. According to Elara Capital, Swiggy outperformed Zomato’s gross order value growth in the food delivery segment, showing improvements in key profitability metrics but facing challenges in the quick commerce space.
