Shares of food delivery and quick commerce leader Swiggy have been aggressively sold off on Dalal Street as its stock hits another 52-week low on increasing concerns over its profitability and the mounting competition within the quick commerce business segment. Nevertheless, global broker Jefferies maintains its “Buy” rating on the stock, suggesting that this pullback may provide an entry point in the long run.
Despite healthy revenue growth and improving food delivery margins in the March quarter, investors are wary of losses at Instamart, Swiggy’s quick commerce venture, due to increasing competition from Blinkit, Zepto, Amazon, and Flipkart.
Swiggy Shares Tumble to a New 52-Week Low
Swiggy shares hit a new 52-week low of nearly Rs 255 on the NSE recently as compared to its all-time high level of Rs 474 reached in September last year. In fact, according to exchanges, Swiggy shares have fallen over 44% from their previous peaks.
Market analysts feel that this is a correction based on concerns over cash burn, the slowdown in the quick commerce segment, and the inability to make profits.
.The stock is further coming under selling pressure after yet another loss reported by the company, even though the loss declined sequentially. In Q4FY26, the company posted a consolidated net loss of about Rs 800 crore compared with Rs 1,065 crore in the previous quarter. However, revenue has been impressive, rising by 45% YoY, indicating robust demand growth in food delivery as well as grocery business.
Reasons Behind Jefferies’ Favorable View on Swiggy
Despite the sharp decline in the stock price, Jefferies has maintained its “Buy” rating and set a target of Rs 415, indicating around 49% potential upside from current levels.
As per the broker, the food delivery segment of Swiggy has seen significant improvements. Growth rates have been accelerated to record highs during the March quarter, with gross order value in food delivery reportedly increasing around 23% YoY. Adjusted EBITDA margin improved to 3.3%.
The initiatives such as Bolt, One BLCK, and the Rs 99 Store launched by the company have played a key role in engaging customers and improving order frequencies, which contribute meaningfully to volumes on the platform.
Quick Commerce Remains a Big Headache
Whereas the food delivery business has turned a corner, Instamart still remains one of the most significant headwinds against profitability. According to analysts, the competition in India’s quick commerce has become so fierce that the rivals spend huge amounts of money on discounts, dark stores, marketing, and delivery.
Instamart growth reportedly underperformed that of Blinkit, increasing concerns about loss of market share. It was noted that the gross order value (GOV) grew by around 68.8%, well below Blinkit’s pace of 95.4%.
Moreover, brokerages pointed out that Swiggy continues to lack a timeframe for reaching EBITDA break-even in the quick commerce vertical.
Jefferies itself said that questions about the viability of the quick commerce operations were far from answered yet. Nevertheless, the brokerage stated that the reason for their optimism regarding the stock lay mainly in the valuation following the heavy sell-off.
Will Swiggy Ever Become Profitable?
According to analysts, the following are the key factors that will drive Swiggy’s route to profitability:
Increased margins in the food delivery vertical
The firm is witnessing some leverage in its food delivery division. Increased order frequency, subscription packages, and delivery efficiencies are likely to result in further margin enhancement in the coming quarters.
Reduced Instamart losses
Swiggy will have to cut back on customer acquisition expenses and enhance average order values in quick commerce. The investor community is closely monitoring the company’s ability to achieve a fine balance between growth and profitability.
Increasing competition intensity
Several rivals have entered the fast commerce market in India. Competitors like Blinkit, Zepto, Amazon, and Flipkart are competing fiercely. As a result, companies are finding it tough to cut back on investments.
What Is the Market Looking For?
Market players are now concentrating more on the operations than on revenue numbers. The following are the crucial metrics:
1. Margin improvements
2. Retention of consumers
3. Order value on average
4. Delivery efficiency
5. Burn rate
6. Dark store expansion
According to Jefferies, the company has nearly Rs 15,000 crore in cash. This provides Swiggy with sufficient liquidity to invest in initiatives for further growth.
Is This the Time to ‘Buy the Dip’?
The sudden drop in the price of Swiggy’s stocks has put Dalal Street at loggerheads. Bulls contend that the dip in stock prices is ideal since they provide value for money on account of the company’s market dominance in terms of food delivery services and its robust consumer base.
However, the bears feel that competition in quick commerce could persistently eat into their margins over the next few years, thus impacting their profitability. Jefferies feels that the dip in the stock prices could turn out to be a buying opportunity for investors who have a longer view of investing in the stock but can withstand short-term volatility. Nevertheless, the brokerage firm also noted that the stock could stay in a narrow trading range until the future outlook in quick commerce becomes clear.
Currently, Swiggy is one of the most-watched tech stocks in the country, with investor
