Macquarie has maintained its ‘Underperform’ rating on Swiggy, keeping the target price at Rs 325, as the company reported a wider-than-expected net loss for the third quarter of FY25. Swiggy’s net loss expanded to Rs 800 crore, compared to a loss of Rs 574 crore in the same period last year, reflecting growing pressures in its quick commerce business.
Swiggy’s revenue grew 31% YoY to Rs 3,993 crore, up from Rs 3,049 crore, signaling strong topline momentum. However, this growth came at the cost of profitability, with EBITDA losses widening to Rs 725 crore, compared to a loss of Rs 525 crore in Q3FY24.
The primary drag on Swiggy’s performance was its Instamart (quick commerce) segment. Quick commerce revenue grew a robust 114% YoY, but the EBIT loss ballooned to Rs 528 crore, significantly higher than the Rs 310 crore loss reported a year ago. Macquarie expressed concerns over the challenged economics of the quick commerce model, noting that despite strong revenue growth, the business is struggling to control costs. Swiggy has maintained its guidance of achieving contribution margin breakeven in Instamart by Q3FY26, but Macquarie remains skeptical given the current trajectory.
In contrast, Swiggy’s food delivery segment showed healthier signs. Food delivery revenue grew 23.5% YoY, while EBIT surged to Rs 193 crore, compared to Rs 26 crore in the previous year. Despite this improvement, Macquarie noted that growth in food delivery is slowing compared to competitors like Zomato, and the quick commerce losses continue to overshadow the gains from food delivery.
Macquarie emphasized that Swiggy’s increased advertising and marketing expenses in Q3 were more than twice that of Zomato’s, further highlighting the company’s struggle to maintain cost discipline. Additionally, Swiggy’s direct cost per order rose 26% QoQ, compared to just 7% for Zomato, despite Swiggy expanding its network less aggressively.
While Swiggy’s management remains optimistic about future growth and profitability, Macquarie maintains a cautious stance, citing challenged unit economics in quick commerce, slower food delivery growth, and stretched valuations. The brokerage continues to prefer Zomato over Swiggy, pointing to Zomato’s superior cost management and stronger overall platform economics.
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