Swiggy Share Price Plunges Over 7% Amid Q3 Loss Surge: Buy, Sell, or Hold?

The Indian food and grocery delivery giant, Swiggy, faced a tough day on the stock market as its shares plummeted 7.4% following the release of its financial results for Q3 FY25. The company reported a consolidated net loss of ₹799.08 crore for the quarter ending December 2024, a sharp increase from the ₹574.38 crore loss recorded in the same period last year.

Swiggy's stock opened at ₹387.95 on the BSE and hit an intraday low of ₹387 before peaking at ₹410.75. With its stock price slipping below the IPO price of ₹390, investor sentiment remained jittery despite strong revenue growth and a promising expansion strategy.

Financial Performance Overview

Despite mounting losses, Swiggy’s revenue from operations showed an impressive 31% year-over-year increase, reaching ₹3,993.06 crore compared to ₹3,048.69 crore in Q3 FY24. However, expenses surged to ₹4,898.27 crore, up from ₹3,700 crore in the corresponding quarter last year, significantly impacting the company’s bottom line.

The company’s Gross Order Value (GOV) for the quarter increased by 38% year-over-year to ₹12,165 crore, reflecting steady demand despite stiff competition in the online food delivery and quick-commerce space.

Food Delivery & Quick-Commerce Segments: Growth vs. Challenges

The Food Delivery segment remained Swiggy’s core strength, reporting a 19.2% year-over-year growth with revenue touching ₹7,436 crore. More notably, adjusted EBITDA saw a sharp 63.7% quarter-over-quarter surge, reaching ₹184 crore, and expanding the margin to 2.5%—a considerable improvement from just 0.3% in Q3 last year.

However, Quick-Commerce, led by Instamart, continued to weigh on profitability. While Instamart’s GOV skyrocketed by 88.1% YoY to ₹39 billion, it fell short of expectations. The segment’s contribution margin declined by 270 basis points quarter-over-quarter to -4.6%, indicating that higher investments in infrastructure and marketing are yet to yield substantial returns.

CEO’s Take on Growth Strategy

Sriharsha Majety, Swiggy’s MD & Group CEO, emphasized the company’s focus on enhancing customer offerings during the festive quarter. He noted that the expansion of dark stores and aggressive marketing efforts in quick-commerce are currently offsetting profits generated from food delivery. However, he remained optimistic that this investment strategy would solidify Swiggy’s position in the long term.

Brokerage Insights: What Analysts Are Saying

Motilal Oswal Financial Services provided key insights into Swiggy’s financial health and stock potential:

• Q3FY25 Revenue: Swiggy posted revenue of ₹39.9 billion, surpassing the estimated ₹38.9 billion.

• Food Delivery Performance: GOV rose 19.2% YoY, with a notable 7.4% increase in contribution margin.

• Instamart Struggles: Contribution margin fell, while adjusted EBITDA stood at -14.8% of GOV, missing projections.

• Stock Outlook: Analysts predict a 10% upside, maintaining a neutral rating with a revised target price of ₹460 (previously ₹520).

Should Investors Buy, Sell, or Hold?

While Swiggy’s revenue growth and improving food delivery margins are encouraging, the company’s rising expenses and widening losses continue to pose risks. Investors should weigh the following factors before making a decision:

✅ Reasons to Buy:

• Strong revenue growth and market expansion

• Improving profitability in core food delivery

• High potential in quick-commerce despite short-term setbacks

⚠️ Reasons to Hold:

• Share price trading below IPO level may offer recovery potential

• Investments in Instamart could pay off long-term

• Market dominance and brand recognition remain strong

❌ Reasons to Sell:

• Rising losses and increasing expenses

• Instamart’s underperformance dragging overall profitability

• Short-term market volatility may lead to further declines

In Conclusion, Swiggy remains a dominant player in India’s food delivery and quick-commerce market, but its path to profitability is still evolving. Investors with a long-term outlook may find potential value in holding the stock, while short-term traders may want to wait for more stability before making new investments. Given the competitive landscape and high expenditure on expansion, Swiggy’s performance in the next few quarters will be critical in determining its stock trajectory.