 "Swiggy shares fall below issue price; stock plunges 28% thus far in January")
Share price of Swiggy, food and grocery delivery platform company, fell 5 per cent to Rs 389.25 on the BSE in Tuesday's intraday trade, falling below its issue price of Rs 390 per share. The stock was quoting at its lowest level since listing on November 13, 2024. Moreover, Swiggy share price has plunged 37 per cent from its 52-week high of Rs 617, touched on December 23, 2024.
Thus far in the month of January 2025, Swiggy shares are down 28 per cent as compared to 3 per cent decline in the BSE Sensex. At 12:01 PM, the stock was trading 4 per cent lower at Rs 394.50 as compared to 0.96 per cent rise in the benchmark index.
With an extensive footprint in food delivery, Swiggy Food collaborates with over 2 lakh restaurants across more than 680 cities. Swiggy Instamart, its quick commerce platform operates in over 75 cities, delivering groceries and other essentials across more than 20 categories in 10 minutes.
Swiggy's unified platform has become essential for urban consumers, covering everything from food delivery to grocery needs in one app. Leveraging a unique blend of convenience, high frequency offerings, and user stickiness, Swiggy stands out in the competitive landscape. While Zomato currently holds the lead in food delivery and quick commerce businesses, Swiggy's all-in one app strategy enables strong cross-utilization across services and better operational efficiency, as per analysts.
Since January 20, that is in the past six trading days, the stock price of Swiggy has fallen 19 per cent after Zomato reported a mixed performance in the December 2024 quarter (Q3FY25). Zomato's management expects the losses in Blinkit to continue in the near term due to aggressive store expansion. It now targets reaching a store-count of 2,000 by December 2025 (vs December 2026 earlier). The pause in the margin expansion, however, is expected to be temporary, according to analysts.
Meanwhile, during the September 2024 quarter, Swiggy posted a gross order value (GOV) for the Food Delivery and Quick Commerce growth of 14.6 per cent year-on-year (Y-o-Y) and 75.5 per cent Y-o-Y, respectively, much lower than that its peer, Zomato.
Take rates in the quick-commerce segment improved 76bps Q-o-Q but were stable for the food delivery. Swiggy has guided that it may achieve profitability in adjusted Ebitda by Q3FY26 (at the consolidated level). Further, it has guided quick-commerce to turn profitable at the adjusted Ebitda level by Q2FY27. While Swiggy is chasing break-even levels, analysts at Elara Capital believe Zomato will continue to hold premium valuations given healthy execution and track record.
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The brokerage firm, in its December month report, said that 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)," analysts at the brokerage said.