By Anurag Tiwari
Swiggy garnered mixed reviews following its Q3 performance. Macquarie confirmed its underperform recommendation, setting a goal of Rs 325, while UBS issued a buy call with a target price of Rs 515.
Swiggy shares fall 7% as Q3 low increases; brokerages expect a challenging quarter coming.
Swiggy shares fell more than 7% to Rs 387 each on February 6, as brokerages expressed varied opinions on the company after its net loss extended to Rs 800 crore in Q3FY25 from Rs 524 crore the previous year. Rising competition intensity and aggressive dark store development continue to eat into profits, and analysts expect these issues to endure in the coming quarter.
UBS maintained its “buy” rating on Swiggy, with a target price of Rs 515, while Macquarie confirmed its “underperform” prediction, giving a lower goal of Rs 325.
Swiggy’s stock has suffered since listing, maintaining flat versus its launch price of Rs 412 per share. swiggy share price While the stock originally rose to an all-time high of Rs 617 on December 23, 2024, it has since dropped roughly 40%.
UBS noted that margin pressure is expected to endure for the foreseeable future, since there are no imminent enhancements planned for dark shop expansion—unlike Zomato. Swiggy has already opened 90 dark stores in January alone, nearly matching its Q3FY25 expansion rate.
Macquarie shared concerns about growing losses in the rapid commerce market, blaming margin erosion on network growth and severe competition. “The hyper-competitive phase is projected to persist for several more quarters. “At this point, we prefer Zomato over Swiggy,” the company stated.
Nuvama also identified Swiggy’s dark shop development as a major obstacle in the March quarter. Heavy expenditures in Instamart, its rapid commerce business, have pressured profits despite strong competition from Blinkit and Zepto. The segment’s contribution margin fell to -4.6 percent in Q3 FY25, from -1.9 percent in the previous quarter.
Swiggy reported a 19.2 percent year-on-year increase in gross order value (GOV) to Rs 7,436 crore, driven by a rising transacting user base and greater order frequency. Meanwhile, Instamart’s annualised total sales run-rate reached $1.8 billion, following only Blinkit ($3.7 billion) and Zepto ($3 billion).
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