ICICI Securities has issued a buy recommendation on Swiggy Ltd., with a target price of Rs 740. The Q3FY25 financials indicated an increase in sales to INR 36.0 billion, while the EBITDA deficit increased to Rs 7.3 billion. Food delivery and fast commerce categories expanded, with food delivery GOV growing by 3.4% QoQ. Promoters owned a sizable interest as of December 2024.
ICICI Securities has issued a buy call on Swiggy Ltd. with a target price of Rs 740.0. Swiggy Ltd’s current market price is Rs 383.8.
Revenue in Q3FY25 was INR 36.0 billion (up 10.9% quarter on quarter and 31.0% year on year), in line with I-Sec expectations. The EBITDA loss was Rs 7.3 billion (compared to Rs 5.5 billion in Q2FY25).EBITDA margin was -18.2% (down 279bps QoQ and 94bps YoY). The net loss was Rs 8.0 billion. Consolidated adj. revenue in Q3FY25 was Rs 42.6 billion, up 10.1% quarter on quarter and 29.3% year on year. Adj. EBITDA loss was Rs 4.9 billion, with an adj. EBITDA margin (as a percentage of revenue) of -11.5%. The cash balance as of December 24 was Rs81.8 billion.
Food delivery: In Q3FY25, food delivery GOV was Rs 74.4 billion, up 3.4% QoQ/19.2% YoY. Adj. revenue (food delivery) was Rs 18.6 billion, up 2.9% QoQ and 21.3% YoY. Food delivery contribution margin (as a percent of GOV) was 7.4% (up 80 basis points QoQ). Adjusted EBITDA was Rs 1.8 billion, with a 2.5% margin (+87 bps QoQ).
Quick commerce’s GOV increased 15.5% QoQ and 88.1% YoY to Rs 39.1 billion. Quick Commerce’s adjusted sales was INR 6.0 billion, increasing 17.5% quarter on quarter and 105.8% year on year.
The contribution margin was -4.6%, down from -1.9% in Q2 FY25. The adjusted EBITDA margin (as a percentage of GOV) was -14.8% in Q3FY25 (compared to -10.6% in Q2FY25), owing to reduced CM, increased marketing expenses, and staffing costs.
Investment Rationale:
ICICI Securities maintains a BUY recommendation on Swiggy, with a three-stage DCF-based target price of Rs 740. Risks include a decline in discretionary expenditure and unfavorable externalities that impair corporate operations.
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