Swiggy shares downgraded by CLSA, target cut; bulls still see 70% upside

Shares of Swiggy Ltd. will be in focus on Friday, January 30, after the food delivery and quick commerce platform reported a wider net loss for the December quarter compared with the year-ago period.

The results have drawn a mixed response from brokerages, with views diverging sharply on the outlook for its quick commerce business.

Nomura maintained a 'Buy' rating on the stock with a price target of ₹546, implying a potential upside of around 70% from current levels.

The brokerage said Swiggy continues to see strong momentum in its food delivery business, while the moderation in quick commerce growth reflects a conscious decision to stay away from irrational competition.

It added that the recent ₹10,000 crore fund raise has strengthened the balance sheet for the quick commerce business.

At current market prices, Nomura believes investors are not ascribing any meaningful value to quick commerce, though it cautioned that better execution and progress toward profitability will be key for the stock's next leg of performance.

CLSA, however, downgraded Swiggy to 'Hold' and cut its price target to ₹335 after the company missed its Q3 revenue and Ebitda estimates.

While food delivery delivered better growth in gross order value and revenues, with Ebitda broadly in line, quick commerce disappointed across metrics, showing slower growth and weaker profitability.

CLSA said that although Swiggy has maintained its contribution breakeven guidance, the path to achieving it now appears steeper.

Morgan Stanley also retained an 'Equal Weight' rating but lowered its target price to ₹375.

The brokerage pointed to steady execution in food delivery across growth and margins, and said management has taken tough calls by trading off growth to protect profitability while sticking to its contribution margin breakeven guidance.

However, limited visibility on when competitive intensity will ease continues to cap the potential for a meaningful re rating.

Jefferies reiterated its 'Buy' rating on Swiggy, though it reduced the price target to ₹440.

The brokerage said food delivery performance was strong, but rising losses in quick commerce were disappointing. It said that higher subsidies in quick commerce failed to deliver the desired outcomes, and welcomed management's acknowledgment that order per day is a vanity metric not worth chasing.

While this shift signals pragmatism, Jefferies flagged risks to market share as competition remains intense and said visibility on the quick commerce Ebitda breakeven timeline remains weak.

The brokerage added that its positive stance is largely driven by Swiggy's valuation discount compared with Eternal.

Swiggy Q3 update

Swiggy reported B2C gross order value growth of 49%, broadly in-line with expectations. Food delivery GOV rose 20.5%, ahead of estimates, while adjusted margins improved to 3% from 2.5% a year ago.

Instamart continued to scale rapidly, with GOV up 103%, while contribution margin in quick commerce improved to minus 2.5% from minus 4.6%.

Average order value in quick commerce jumped 40% YoY to ₹746.

Management said it has consciously chosen not to pursue deep discount driven, volume focused growth and reiterated its guidance for contribution breakeven in quick commerce by Q1FY27.

Non grocery now accounts for over 32% of Instamart sales, up sharply from last year.

In food delivery, products such as Bolt and the 99 store initiative together contribute more than 20% of volumes.

The company maintained its guidance of 18-20% YoY GOV growth in food delivery and an adjusted Ebitda margin of 4.5-5% of GOV.

28 analysts have coverage on Swiggy, of which 23 have a 'Buy' rating, three say 'Hold', while two have a 'Sell' recommendation.

Shares of Swiggy gave up all the gains of the day in the final few minutes of Thursday's trading session ahead of the earnings announcement to end little changed at ₹323.85. The stock is down 17% from its IPO price of ₹390.