Key Points:
- Swiggy’s stock fell after the target cuts.
- Competition delays margin recovery.
- Long-term growth outlook stays positive.
Swiggy Ltd.’s shares fell on investor concerns after brokerages trimmed price targets amid widening quarterly losses, even as some analysts forecast substantial long-term upside from quick-commerce growth.
Swiggy’s stock slipped following revisions by analysts who cut its share price target, citing intense competition in the quick-commerce (QC) segment and slower margin recovery. Despite the downward adjustment, some brokers continue to forecast strong long-term gains on robust revenue growth and potential profitability improvements.
Analysts Trim Targets, Caution On Margins
Brokerages, including UBS, lowered Swiggy’s price target, reflecting heightened competitive pressure in India’s rapid delivery market and slower than expected margin improvement in its Instamart QC business. UBS maintained a buy rating but cut the target to about ₹510 from an earlier higher level, saying discounting and intense price competition are weighing on profitability.
Investors sold Swiggy’s shares as these revised targets filtered through markets, contributing to near-term stock weakness despite continued revenue growth. Analysts also trimmed medium-term EBITDA forecasts for Swiggy as QC competition with rivals such as Blinkit and Zepto remains fierce.
A UBS report noted that rising discounts and expanded marketing spending in QC have delayed margin recovery, prompting cuts in adjusted earnings before interest, taxes, depreciation, and amortisation projections over the next two to three years.
Some Bulls See Long-Term Upside
Despite the target cuts, several market watchers remain constructive on Swiggy’s prospects, pointing to continued strong demand in food delivery and quick-commerce, underpinned by broad user engagement and network expansion.
“One key driver remains the rapid growth of our Instamart business, which is building scale across cities while driving top-line momentum,” a market strategist familiar with the sector said, highlighting structural growth potential even as margins lag. Brokers tracking the stock also see potential for the share price to appreciate significantly over a longer horizon, assuming continued expansion and eventual profitability improvements.
Other analysts retain buy ratings, underscoring broad institutional investor confidence and suggesting that recent corrections may present entry points for long-term investors focused on India’s expanding home delivery economy.
Company Posting Mixed Financial Signals
Swiggy’s shares latest quarterly results illustrate this dichotomy in performance: revenue climbed sharply year-over-year on strong food delivery and QC growth, but net losses widened as investment in operations and customer acquisition continued. Consolidated revenue for the December quarter rose more than fifty percent compared with the prior year, but the net loss expanded amid steep expenses tied to rapid expansion.
Management has reiterated its commitment to scaling operations while driving efficiencies, but achieving sustained profitability remains a multiyear objective. “We are focused on balancing growth with cost discipline as we scale quick-commerce,” a Swiggy spokesperson said in a statement, adding that the company sees a path to improved contribution margins over time. Analysts say focus on network density and improved average order values will be key to reaching this goal.
Competitive Landscape Intensifies
Swiggy’s shares face stiff competition from rival platforms such as Zomato’s Blinkit, which reported strong profitability gains in its own QC business and broad revenue growth in its latest quarter. Eternal Ltd., the parent of Zomato and Blinkit, posted a notable profit uptick, reinforcing competitive dynamics in the broader delivery market.
These rival performance metrics have heightened scrutiny on Swiggy’s share price evolution and stock valuation, influencing how analysts assess the balance between growth prospects and near-term financial pressures.
Despite current stock weakness, the range of analyst views, from cautious short-term outlooks to bullish long-term forecasts, underscores the complexity of valuing high-growth technology-enabled delivery businesses as they navigate competitive headwinds and evolving unit economics.
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