Swiggy share price target cut by various analysts after Q2 results citing multiple concerns

Shares of food delivery and quick-commerce aggregator Swiggy Ltd. will be reacting to its September quarter results on Friday, October 23. The numbers were reported after market hours on Thursday, where the company reported yet another net loss.

Brokerage firm Motilal Oswal has cut its price target on Swiggy to ₹280 from ₹360 earlier, although it still maintained its "buy" recommendation on the stock. The revised price target implies an upside potential of 32% from Thursday's closing price, which is close to record low levels for the stock.

Motilal Oswal's revised price target is also below Swiggy's IPO price of ₹390.

Swiggy is now growing slower than Eternal on both the Food Delivery and the Quick Commerce front, according to the firm. For the first half of this financial year, Eternal's Gross Order Value (GOV) in the Food Delivery business grew 21.7%, while for Swiggy, that figure stood at 17.5%.

Even for Instamart, the Net Order Value growth year-on-year during the first half of this financial year was just 37%, compared to Blinkit's 83%. Orders per dark store per day stood at 1,611 for Blinkit in the September quarter, compared to only 1,168 for Instamart.

Instamart added only 97 stores during the quarter, compared to 508 that Blinkit added.

Competitive intensity remains elevated, with management noting that the recent easing is too early to be considered sustained. Swiggy continues to focus on user retention, frequency, and differentiated assortment.

MOTILAL OSWAL'S NOTE

In Motilal Oswal's Discounted Cash Flow analysis, Swiggy's Instamart currently carries negative value, reflecting weaker-than-expected growth, and an extended path towards the company's profitability.

The brokerage has cut Swiggy's financial year 2026-2030 Net Order Value CAGR assumption to 32% from 38% earlier, to factor in a slower growth trajectory than Blinkit, as competitive intensity continues to impact Instamart's performance. "Lower growth is expected to delay operating leverage and extend the period of losses, resulting in downward revision to our estimates," Motilal Oswal's note said.

However, the brokerage added that despite the concerns, it continues to believe in Swiggy's food delivery franchise and brand recall providing long-term strategic value for shareholders, but only a clear path towards EBITDA profitability for Quick Commerce will be critical for any meaningful re-rating.

Citi Cuts Swiggy's Price Target

Citi has maintained its "buy" rating on Swiggy but has cut its price target to ₹330, stating that Swiggy is continuing to explore avenues sustainably by expanding serviceable TAM in the food delivery via Toing, and improve user retention and take-rates in Instamart via differentiated assortments.

HSBC Highlights Multiple Worries

HSBC has a "hold" rating on Swiggy but has cut its price target to ₹240 from ₹315 earlier. The firm said that while there has been some improvement in operating metrics in the second quarter, that is not enough to improve confidence in the long-term guidance of the company.

The Food Delivery loss of share and heightened competition creates further worries and while the Instamart growth has improved, a relative reduction in size will remain a challenge for the EBITDA break-even target, HSBC noted.

CLSA Demands Steady Improvement From Swiggy

CLSA has also maintained its "outperform" rating on Swiggy but cut its price target to ₹262.

While Swiggy remains confident of a turnaround in growth and profitability for Instamart, we believe rebuilding investor confidence will require a steady improvement over next few quarters. While investor expectations remain low, we believe categories offer significant opportunities.

CLSA ON SWIGGY

Nomura Bets on Swiggy's Cash Cow

Nomura has also cut Swiggy's price target to ₹300, stating that food delivery business remains a cash cow for Swiggy and expects it to generate EBITDA of ₹1,300 crore to ₹1,900 crore in financial year 2027-2028.

However, they lack the conviction to ascribe a positive value to the Quick Commerce business as they remain in a wait-and-watch mode.

They went on to add that disappointment in Quick Commerce is well reflected in the share price, thereby making risk-reward favourable.

How Did Swiggy Fare In Q2

For the September quarter, Swiggy reported a net loss of ₹922 crore from a loss of ₹1,092 crore during the same period last year. Revenue for the quarter increased by 36.1% to ₹7,571 crore, while its EBITDA loss remained nearly the same at ₹770 crore from a loss of ₹798 crore last year.

Food delivery segment revenue increased by 21.6% year-on-year, while segment margins expanded to 14.9% from 13.1% last year, while the EBIT loss for the Quick Commerce business widened to ₹764 crore from ₹739 crore last year.

The management has expressed optimism of achieving its full year guidance of 18% to 20% growth.

30 analysts currently have coverage on Swiggy, of which 23 have a "buy" rating, four say "hold", and three have a "sell" rating.

Shares of Swiggy ended 5.5% lower on Thursday ahead of the results announcement at ₹211.4. The stock is down 46% so far this year, compared to Eternal, whose share price has gained 7% so far year-to-date.

This story will be updated with more recommendations.