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What is the story about?
Shares of food delivery and quick commerce aggregator Swiggy Ltd.
was downgraded by brokerage firm CLSA, after it reported another quarterly loss for the April-June period. The numbers were reported after market hours on Thursday.
CLSA has downgraded its rating on Swiggy to "hold", from its earlier rating of "accumulate" and also cut its price target to ₹318 from ₹357 earlier.
The brokerage said that the Food delivery Gross Order Value (GOV) growth was lower than expectations and lagged Zomato, while adjusted EBITDA margin was a bigger miss, led by lower contribution due to higher delivery costs and also the impact of Toing.
More importantly, CLSA said that it finds changes in Swiggy's strategy confusing for investors and as play store ratings suggest, also for consumers.
Macquarie also has an "underperform" rating on Swiggy with a price target of ₹230, stating that key metrics did not see any improvement in the quarter, such as dark store throughput and monthly transacting users.
"While Swiggy has outlined a path to adjusted EBITDA breakeven in Instamart, both timeline and trajectory are opaque," Macquarie's note stated.
Both HSBC and Morgan Stanley have "hold" and "equalweight" ratings on Swiggy respectively with price targets of ₹300 and ₹322.
HSBC said that while Swiggy valuations are undemanding, it still has a lot to prove and execution improvement remains key for the company.
On the other hand, Nomura has a "buy" rating on Swiggy with a price target of ₹435.
The brokerage anticipates cash losses in Instamart to continue in financial year 2027 as well and is anticipating an adjusted EBITDA loss of ₹3,100 crore in financial year 2027 and ₹2,300 crore in financial year 2028.
Nomura noted that Swiggy can fund these losses with a cash balance of ₹14,300 crore and the cash generated from the food delivery business.
JM Financial has also downgraded Swiggy to "sell" from its earlier rating of "reduce" with a price target of ₹250.
Swiggy reported a net loss of ₹791 crore during the quarter, while its EBITDA loss stood at ₹650 crore.
Food delivery business Gross Order Value grew at 17.4% from last year, lower than expectations of 18-19% growth, while Instamart's Net Order Value grew 38.9% year-on-year, much lower than expectations of 40% to 50% growth.
Despite this, 70% of the 30 analysts tracking Swiggy have a "buy" rating on the stock (21). Six others have a "hold" rating, while only three have a "sell" rating on the stock.
Shares of Swiggy ended 2.2% higher on Thursday at ₹293.8. The stock is up 23% in the last one month but remains well below its issue price of ₹390.
CLSA has downgraded its rating on Swiggy to "hold", from its earlier rating of "accumulate" and also cut its price target to ₹318 from ₹357 earlier.
The brokerage said that the Food delivery Gross Order Value (GOV) growth was lower than expectations and lagged Zomato, while adjusted EBITDA margin was a bigger miss, led by lower contribution due to higher delivery costs and also the impact of Toing.
More importantly, CLSA said that it finds changes in Swiggy's strategy confusing for investors and as play store ratings suggest, also for consumers.
Macquarie also has an "underperform" rating on Swiggy with a price target of ₹230, stating that key metrics did not see any improvement in the quarter, such as dark store throughput and monthly transacting users.
"While Swiggy has outlined a path to adjusted EBITDA breakeven in Instamart, both timeline and trajectory are opaque," Macquarie's note stated.
Both HSBC and Morgan Stanley have "hold" and "equalweight" ratings on Swiggy respectively with price targets of ₹300 and ₹322.
HSBC said that while Swiggy valuations are undemanding, it still has a lot to prove and execution improvement remains key for the company.
On the other hand, Nomura has a "buy" rating on Swiggy with a price target of ₹435.
The brokerage anticipates cash losses in Instamart to continue in financial year 2027 as well and is anticipating an adjusted EBITDA loss of ₹3,100 crore in financial year 2027 and ₹2,300 crore in financial year 2028.
Nomura noted that Swiggy can fund these losses with a cash balance of ₹14,300 crore and the cash generated from the food delivery business.
JM Financial has also downgraded Swiggy to "sell" from its earlier rating of "reduce" with a price target of ₹250.
Swiggy reported a net loss of ₹791 crore during the quarter, while its EBITDA loss stood at ₹650 crore.
Food delivery business Gross Order Value grew at 17.4% from last year, lower than expectations of 18-19% growth, while Instamart's Net Order Value grew 38.9% year-on-year, much lower than expectations of 40% to 50% growth.
Despite this, 70% of the 30 analysts tracking Swiggy have a "buy" rating on the stock (21). Six others have a "hold" rating, while only three have a "sell" rating on the stock.
Shares of Swiggy ended 2.2% higher on Thursday at ₹293.8. The stock is up 23% in the last one month but remains well below its issue price of ₹390.
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