A leading food delivery and quick commerce giant in India has revealed its path to profitability, projecting positive earnings by late 2025. Despite widening losses attributed to core operations and infrastructure investments, the company shows promising growth in adjusted earnings. Recent analyst reports maintain optimism, highlighting strategic decisions to limit dark store expansion while focusing on existing operations and margin stability.
Share Price Movement
The share price of Swiggy Limited went down 7.84 percent to Rs. 385.25 per share on Thursday, a decline from its previous close of Rs. 418.05 per share. The market capitalisation now stands at approximately Rs. 89,736 crore as of February 06, 2025.
Guidance
Swiggy told the regulator it expects to achieve positive adjusted EBITDA by Q3 of FY26. CFO Rahul Bothra explained the widening net loss was due to a combination of food delivery and investments in quick commerce, along with ESOP charges. He added that adjusted EBITDA increased by Rs 149 crore in the quarter, driven by higher depreciation from investments in warehousing and dark store infrastructure.
Target by UBS
UBS has maintained a ‘Buy’ rating on Swiggy with a target price of Rs 515, offering a 33.67% upside. The management reaffirmed its group-level breakeven targets, though margin pressure is expected to continue in the coming quarters.
Unlike Zomato, Swiggy has no plans for further dark store expansion, having added 90 dark stores in January, nearly matching Q3FY25’s total. However, sequential margins are not expected to decline as they did from Q3 to Q2.
*We cannot confirm UBS’s claim, as management has reported significant progress in their dark store expansion, adding 96 net new stores in Q3FY25 (+16% QoQ) and 86 more in January 2025. They remain confident in achieving their target of 4 million sq ft of active dark store space by March 2025, as reflected in their steady growth in store count and area.
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Q3 Financial Highlights
In Q3FY25, revenue stood at Rs. 3,993 crore, marking a 31% YoY growth from Rs. 3,049 crore in Q3FY24 and an 11% QoQ increase from Rs. 3,601 crore in Q2FY25. However, the company reported a loss of Rs. 799 crore in Q3FY25, a higher loss than Rs. 611 crore in Q3FY24 and Rs. 626 crore in Q2FY25, indicating a worsening financial performance.
Market Outlook
The quick commerce sector is transforming India’s retail and last-mile delivery landscape, driven by mobile internet and the shift toward e-commerce. This trend, accelerated by the COVID-19 pandemic, has led to a surge in demand for fast deliveries, particularly in groceries and perishables.
Quick commerce platforms, like Zomato’s Blinkit, Swiggy Instamart, and Dunzo, have grown rapidly, with projections showing a 27.9% CAGR through 2027. Technology, including advanced algorithms and route optimisation, plays a vital role in enabling ultra-fast deliveries and shaping consumer convenience.
Written By Fazal Ul Vahab C H
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