Synopsis
Swiggy's shares have plummeted by 38.32% YTD, reflecting investor concerns over rising losses and slowing growth. Despite a slight recovery, analysts warn of significant challenges ahead as competition intensifies in both food delivery and quick commerce.Key Takeaways
- Swiggy's stock fell 38.32% YTD.
- Bank of America downgraded it to 'underperform'.
- Q3 FY25 net loss surged to Rs 799 crore.
- Competition is affecting profitability.
- Revenue from operations grew 10.9% QoQ.
Mumbai, April 15 (NationPress) Swiggy's stock has experienced a drastic decline this year, falling by 38.32% year-to-date (YTD) on the National Stock Exchange (NSE), as investor confidence diminishes due to the company’s escalating losses and margin pressures.
The stock closed unchanged at Rs 334.5 on Tuesday, facing continuous pressure as concerns grow over its quick commerce operations and stagnating growth in its food delivery sector.
In the last six months, the stock has dropped 26.64%, while data from the past month indicates a 6.05% decrease on the NSE.
Despite a slight recovery of 4.29% in the past five days, the overall trend remains negative, with analysts foreseeing ongoing challenges.
Last month, Bank of America (BofA) downgraded Swiggy’s rating to 'underperform', reducing its target price from Rs 420 to Rs 325.
The brokerage identified slowing growth in food delivery and increasing competition in quick commerce as significant risks.
BofA also highlighted that intensified competition from new players offering substantial discounts, along with rising marketing costs, could severely impact Swiggy's profitability in the short term.
“This heightened competition may result in increased marketing expenses, larger platform discounts, and reduced delivery fees for customers,” the brokerage noted on March 26.
Analysts express a more concerning issue: profits from food delivery, once a reliable income source, are being diverted to offset losses in quick commerce, a sector that is still far from achieving breakeven.
Adding to the negative outlook, the company reported a Rs 799 crore net loss in Q3 FY25, marking a 39% increase from the same period last year.
Sequentially, losses also surged compared to the previous quarter, with Swiggy’s operating loss (EBITDA before interest, tax, depreciation, and amortisation) escalating to Rs 725.66 crore.
Nevertheless, revenue from operations increased by 10.9% quarter-on-quarter (QoQ) to Rs 3,993 crore, attributed to greater contributions from Instamart.
The food delivery service is poised to release its Q4 FY25 results shortly.
