Swiggy shares plunge 6% even as losses narrow. Should investors buy, sell or accumulate?

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The company’s revenue from operations, meanwhile, increased more than 37% YoY to Rs 6,812 crore during the April–June quarter of FY27, from Rs 4,961 crore in the corresponding quarter of the previous financial year.

Instamart, the company’s quick commerce arm, also saw its losses narrow to Rs 651 crore in Q1 FY27 from Rs 797 crore in the year-ago period. Its revenue from operations, meanwhile, surged nearly 53% YoY to Rs 1,232 crore. Instamart’s Gross Order Value (GOV) rose nearly 40% YoY to Rs 7,907 crore, while its contribution margin improved by 440 basis points to 0.2%.

Also read:Company in a strong position, competition poses no threat to growth: Swiggy

Swiggy shares: Buy, sell or hold?

Nomura maintained its 'Buy' rating on Swiggy but cut its target price to Rs 435, implying an upside of about 47%. The brokerage said Instamart is prioritising growth over margins and remains well-funded to navigate near-term headwinds. Adjusted EBITDA margin declined 20 basis points to 3.1%, mainly due to seasonal investments in rider availability and annual salary hikes, while monthly transacting users rose 4.9% QoQ to 19.2 million. Nomura expects Swiggy's food delivery business to deliver 17–18% YoY GOV growth with adjusted EBITDA margins of 3.2–4.4% over FY27–28.Read more:Swiggy Instamart ropes in ex-Myntra boss Nandita Sinha as q-comm battle heats up

Elara Capital has downgraded Swiggy to Accumulate from Buy and trimmed its target price to Rs 350 from Rs 360. The brokerage noted that food delivery GOV grew 17.4% YoY, supported by healthy growth in monthly transacting users. However, the contribution margin in the food delivery business softened sequentially despite stronger take rates. Elara said the downgrade reflects delayed profitability and a longer-than-expected timeline for margin convergence with peers.

“In a period where quick commerce competition has only intensified, we prioritised improving unit economics over fleeting headline growth. Our efforts over the last few quarters to reset our user base, economics and experience have together made the business much stronger and increased the staying power,” said Sriharsha Majety, founder and group CEO, Swiggy.

Swiggy Q1 management commentary

Instamart’s contribution margin for the quarter stood at -0.2% of GOV, improving by 4.4 percentage points from a year earlier, while adjusted EBITDA losses narrowed to Rs 778 crore from Rs 896 crore in the year-ago period.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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