Swiggy shares dropped 7.4% to a new 52-week low of Rs 385.25 on the BSE on Thursday, February 6, after the company reported a consolidated loss of Rs 799 crore for the December quarter, widening from a loss of Rs 574 crore in the same period last year.
However, revenue from operations for Q3FY25 stood at Rs 3,993 crore, marking a 31% increase from Rs 3,049 crore in the corresponding quarter of the previous financial year.
The losses were up on a sequential basis as well as the company had posted a consolidated loss of Rs 626 crore in Q2FY25. However, the topline grew 11% from Rs 3,601 crore reported in the July-Sepmber quarter of the current financial year.
Swiggy's widening losses can be attributed to a 32% YoY increase in its Q3FY25 expenses, which rose to Rs 4,898 crore compared to Rs 3,700 crore in the same period last year. In Q2FY25, the total expenses incurred by the food delivery company were recorded at Rs 4,309 crore.
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Should you buy, sell, or hold Swiggy's stock? Here's what analysts say:
The management has reiterated its group-level breakeven targets, though margin pressure is expected to persist in the coming quarters. Unlike Zomato, Swiggy has no plans for dark store expansion. In January, the company added 90 dark stores, nearly matching the total additions in Q3FY25. However, sequential margins are not expected to decline as they did from Q3 to Q2.
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The brokerage noted that Q-commerce economics remain significantly challenged, with the segment reporting a wider-than-expected net loss. Network expansion and rising competitive intensity have impacted margins, and the period of hyper-competition is expected to continue for a few more quarters. However, the food delivery business is projected to achieve margin guidance over time. Macquarie prefers Zomato over Swiggy.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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The losses were up on a sequential basis as well as the company had posted a consolidated loss of Rs 626 crore in Q2FY25. However, the topline grew 11% from Rs 3,601 crore reported in the July-Sepmber quarter of the current financial year.
Swiggy's widening losses can be attributed to a 32% YoY increase in its Q3FY25 expenses, which rose to Rs 4,898 crore compared to Rs 3,700 crore in the same period last year. In Q2FY25, the total expenses incurred by the food delivery company were recorded at Rs 4,309 crore.
Also Read: Stocks in news: ITC, SBI, Airtel, Swiggy, Azad Engineering
Should you buy, sell, or hold Swiggy's stock? Here's what analysts say:
UBS
UBS has maintained a 'Buy' rating on Swiggy with a target price of Rs 515.The management has reiterated its group-level breakeven targets, though margin pressure is expected to persist in the coming quarters. Unlike Zomato, Swiggy has no plans for dark store expansion. In January, the company added 90 dark stores, nearly matching the total additions in Q3FY25. However, sequential margins are not expected to decline as they did from Q3 to Q2.
Also Read: Bharti Airtel Q3 results preview: PAT likely to double YoY as earnings get Indus Towers boost
Macquarie
Macquarie has maintained an 'Underperform' rating on Swiggy with a target price of Rs 325.The brokerage noted that Q-commerce economics remain significantly challenged, with the segment reporting a wider-than-expected net loss. Network expansion and rising competitive intensity have impacted margins, and the period of hyper-competition is expected to continue for a few more quarters. However, the food delivery business is projected to achieve margin guidance over time. Macquarie prefers Zomato over Swiggy.
Nuvama
Nuvama noted that Swiggy's (Not Rated) food delivery segment remains stable. However, competitive intensity continues to pressure margins. Instamart's adjusted EBITDA margin fell by 420bps QoQ, while contribution margin declined by 270bps QoQ. The drop is partially attributed to dark store additions, with further expansion in dark stores expected to pose a headwind in Q4.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
