Macquarie has initiated an underperform rating on Swiggy, setting a target price of ₹325. The brokerage highlights that while Swiggy has a long growth runway, the path to profitability is expected to be challenging and bumpy.
Swiggy, India’s second-largest consumer app in food delivery, faces hurdles in catching up with leader Zomato. Macquarie notes that Swiggy’s Quick Commerce segment is complex and lacks a clear route to sustainable economic profitability.
Macquarie anticipates that Swiggy’s Group EBIT will reach breakeven by FY28, assuming a 23% compound annual growth rate (CAGR) in core revenue. The brokerage observes that Swiggy’s contribution margin is close to Zomato’s, but on an adjusted EBITDA margin level, Swiggy lags due to a smaller gross order value (GOV) base, which limits its ability to offset central branding and employee costs. Macquarie expects Swiggy to bridge this profitability gap by expanding its transacting user base by around 30%.
Disclaimer: This article is for informational purposes only and should not be considered as financial advice. Please consult a financial advisor before making any investment decisions.
