Swiggy tanks 26% in 6 days, hits new low on weak Q3 operational performance

The stock hit a new low of Rs 339.45; fell 45% from its 52-week high of Rs 617 touched on December 23, 2024 and quoted 13% below its issue price of Rs 390 per share.

Shares of Swiggy, food and grocery delivery platform company, hit a new low of Rs 339.45, down 6 per cent on the BSE in Tuesday’s intra-day trade, extending its past 5-day decline, on the back of weak operational performance in the December 2024 (Q3FY25) quarter. 

 

In the last six trading days, the stock tanked 26 per cent, and, shed 45 per cent from its 52-week high of Rs 617 touched on December 23, 2024. Swiggy made its stock market debut on November 13, 2024. Currently, the stock quotes 13 per cent below its issue price of Rs 390 per share.

 

 

Swiggy on February 5 reported that its consolidated net loss widened to Rs 799 crore for Q3FY25 from a loss of Rs 574.3 crore reported during the same period last year. In the preceding quarter, July-September (Q2FY25), the company had reported a net loss of Rs 625.50 crore.

 

Despite widening losses, the company's consolidated revenue from operations grew 31 per cent year-on-year (YoY) to Rs 3,993 crore, up from Rs 3,049 crore in Q3FY24, indicating strong demand in its core business.

 

Swiggy’s gross order value (GOV) - the total worth of all orders placed on its platform - rose 38 per cent Y-o-Y to Rs 12,165 crore. The company also reported a 2 per cent Y-o-Y reduction in consolidated adjusted Earnings before interest, taxes, depreciation, and amortisation (Ebitda) loss, which stood at Rs 490 crore. However, on a quarter-on-quarter basis, Ebitda loss increased slightly to Rs 149 crore, reflecting persistent operational costs.

 

According to analysts at HDFC Securities, quick commerce (QC) execution fell short of expectations (lagged Blinkit too) in Q3. QC GOV and Average Monthly Transacting Users (MTU) grew 15.5/13.4 per cent quarter-on-quarter (QoQ) to Rs 3,900 crore/Rs 70 lakh, respectively, (vs Blinkit’s 27/19 per cent QoQ) as rising competition kept customer incentives, acquisition costs and dark store network investments elevated. Still early days, but execution variance is widening between the two platforms in QC, the brokerage firm said.

 

For both platforms, food delivery (FD) and QC, despite stable GOV density QoQ, Instamart’s incremental QC burn was higher than that of Blinkit’s. The brokerage firm has increased its estimates of QC losses for Swiggy. Overall adjusted EBITDA losses stand revised at –Rs 1,580/-Rs 1,230 crore (earlier: -Rs 1,440/-Rs 1,030 crore) for FY26/27 respectively.

 

Swiggy's Q3FY25 results were below expectations with QC GOV growth and margins surprising negatively in comparison to Zomato's performance. Management reiterated group level break-even targets, but acknowledged that competition in QC space is intense and margin pressure will continue in the next few quarters, analysts at UBS said.

 

On FD, management acknowledged that there have been some macro headwinds in some segments, but medium-term growth expectation of c20 per cent remains unchanged due to a combination of growing supply and growth in user base and success of new initiatives such as Bolt which is contributing c9 per cent of order volumes. QC competition remains intense and management refrained from providing near-term outlook although they did mention that sequentially margins will not decline as much as they did in Q3 vs Q2, UBS said in the result update.

 

Swiggy’s consolidated operating losses could further expand in Q4 as the company intends to expand its dark store coverage at an accelerated pace. These trends could significantly intensify the pressures on Swiggy’s stock price in our opinion in the near term, despite valuations support on account of improved growth/margin trajectory food delivery business, said analysts at JM Financial Institutional Securities.

 

Swiggy is a food service platform based in India. Customers use the platform to browse, order and pay for food (Food Delivery), grocery and household items (Instamart) and have their orders delivered to their doorstep. Customers can also use the Swiggy platform to make restaurant reservations (Dineout) and for events bookings (SteppinOut), for product pick-up/ drop-off services (Genie) and to engage in other hyper-local commerce activity. In FY24, online food delivery accounted for 46 per cent of revenue, quick commerce for 9 per cent and supply chain and distribution for 42 per cent.