Swiggy tanks 11% post Zomato Q3 results; plunges 31% from December high

Zomato's management expects the losses in Blinkit to continue in the near term, due to aggressive store expansion.

Shares of Swiggy, food and grocery delivery platform company, tanked 11 per cent to Rs 427.20 on the BSE in Tuesday’s intra-day trade amid heavy volumes after its peer Zomato reported a muted performance in the December quarter (Q3FY25). 

 

The stock price of Swiggy has corrected 31 per cent from its 52-week high of Rs 617 touched on December 23, 2024. It had hit a 52-week low of Rs 390.70 on its listing day i.e. November 13, 2024. The company issued shares at price of Rs 390 per share in its initial public offering (IPO).

 

At 02:44 PM; Swiggy was trading 8 per cent lower at Rs 439.55, as compared to 1.6 per cent decline in the BSE Sensex. The average trading volumes at the counter jumped over 1.5 times. A combined 18.83 million equity shares changed hands on the NSE and BSE.

 

Zomato’s Q3 performance was a mixed bag. GMV for Food Delivery (FD) grew at subdued 16.8 per cent year-on-year (YoY) owing to a slowdown. In the quick commerce (QC) space, Blinkit aims to have 2,000 stores by CY25, instead of CY26 earlier (from 1,007 as at end-Q3), which could hit the recent improvement in profitability, according to analysts at Elara Capital.

 

Strained Q3 earnings were led by losses in quick commerce and slower GMV growth in Food Delivery. Per Zomato, aggressive store addition in quick commerce may lead to losses therein. Blinkit GMV compound annual growth rate (CAGR) is estimated to remain strong at 96 per cent through FY24-27E led by higher store network. The brokerage firm also raise FD adjusted EBITDA estimates to 5.0 per cent (FY27E). The brokerage firm does not expect quick commerce to be hit much by the entry of e-commerce, as both will coexist due to niche propositions.

 

The management expects the losses in Blinkit to continue in the near term, due to aggressive store expansion; it now targets reaching store-count of 2,000 by December 2025 (vs December 2026 earlier); but the pause in margin expansion is expected to be temporary. Going Out also reported a loss, due to investments in the new District app. Emkay Global Financial Services cut FY25-27E EPS by 46-83 per cent, building in the Q3 performance, lower Blinkit margin, and expansion plans.

 

Analysts at JM Financial Institutional Securities revised down its GOV estimates for food delivery by 1- 4 per cent over FY25-27 on the back of slower than estimated GOV expansion in Q3 and the broader headwinds for discretionary spends in the country. On the other hand, Blinkit GOV estimates are raised by 4-16 per cent to factor in very strong growth trends in the business, aided by accelerated store expansion, the brokerage firm said in result update.