Swiggy Down 2%; Hits Another New Low

Shares of Swiggy continued to decline for the fourth-consecutive trading session as the food aggregator platform’s Q3 EBITDA losses were higher than street estimates. Swiggy stock fell by 2.5% to ₹379.20 on BSE.

Surprisingly, the stock fell below its IPO issue price of ₹390 in the previous session. Though revenue jumped by 31% year-on-year (YoY), Swiggy's Q3 loss widened to ₹Rs 799 crore.

“Given the heightened competitive intensity and continued investment in dark stores, we expect the losses to further widen in Q4. While food delivery KPIs (on growth, MTUs increase etc) were better than Zomato, the quick com KPIs lagged Zomato, particularly in terms of order growth & contribution margin (CM)," BofA Securities said.

Setting a target price of ₹510, the brokerage said that despite earnings miss, it maintains buy as competition is set to become intense in the coming 3-6months. However, the brokerage is optimistic on the medium-term potential from growth of quick commerce.

Motilal Oswal believes that increased competition and heightened expansion of dark stores have dented profitability expectations for the quick commerce sector in the near term.

Brokerages including JPMorgan, Bernstein, UBS, BofA Securities, JM Financial and Kotak Institutional Equities have issued bullish ratings on the stock following Q3 results.

Analysts at JP Morgan said, “While elevated competition and quick commerce losses could weigh on the stock, superior food delivery growth with similar margin expansion is the key silver lining in the print.”