Swiggy has garnered mixed reactions from analysts following its recent performance updates. CLSA maintained an ‘Outperform’ rating with a target price of Rs 750, citing strong growth in the food delivery segment and continued expansion in quick commerce. The brokerage noted that food delivery growth was driven by Swiggy Bolt, with margins beating expectations, reflecting efficient cost management. However, despite quick commerce gross order value (GOV) beating estimates, contribution margins disappointed, largely due to aggressive expansion of dark stores and increased operational costs.
On the other hand, Bernstein expressed caution, cutting its target price to Rs 575 from Rs 635, while maintaining an ‘Outperform’ rating. Bernstein described Swiggy’s performance as “A Game of Two Halves,” highlighting the contrasting dynamics between the food delivery and quick commerce segments. Swiggy’s food delivery segment grew 19% YoY, outpacing Zomato’s 17% YoY growth and gaining further market share. EBITDA margins expanded by 90 bps, driven by lower delivery costs and higher take rates. However, the quick commerce segment faced challenges, with adjusted EBITDA margins falling to -14.8%, a 450 bps decline QoQ, due to rising marketing expenses and accelerated dark store investments amid a hyper-competitive environment.
