Swiggy hits fresh 52-week low post weak Q3 earnings; Macquarie sees over 22% potential downside

Shares of food delivery platform Swiggy tumbled sharply by as much as 7.4 per cent in Thursday's trade (February 6) hitting a fresh 52-week low price of Rs 387M after the company's weak set of earnings for the December quarter. For the review quarter, the company's consolidated net loss widened to Rs 799 crore as against Rs 574.4 crore in the corresponding period of the previous fiscal year. In the preceding September quarter, the company's loss was reported at Rs 625.5 crore.

Revenue from operations, however, surged to Rs 3,993 crore in comparison to Rs 3,048.6 crore reported in Q3FY24, marking a 31 per cent year-on-year rise. The revenue on a sequential basis grew 10.9 per cent. 

Also, EBITDA loss at the new-age company expanded from Rs 554.3 crore in the September quarter to Rs 725.8 crore in the quarter ended December 31, 2024.

In Q3, Swiggy’s Gross Order Value (GOV) grew 38 per cent YoY to Rs 12,165 crore, while the consolidated adjusted EBITDA loss reduced by around 2 per cent YoY to Rs 490 crore but rose Rs 149 Cr QoQ, noted the company's release.

Here's how global brokerages view Swiggy after its Q3 show

Hong Kong-based global brokerage CLSA has continued with its 'Accumulate' rating on the stock with the target slashed to Rs 726 from Rs 750. The brokerage underscored that food delivery growth at the company was driven by Bolt, the company's 10-minute food delivery service.

Further, according to the brokerage, in the Quick Commerce segment (QC), Gross Order Value or GOV was better-than-estimates, while the contribution margin disappointed.

Dark store & city expansion, however, continues, it added. 

Meanwhile, JP Morgan has also reiterated its previous 'overweight' call with the target slashed to Rs 620 from Rs 730 earlier.

Macquarie, however, having a bearish outlook, maintained an 'Underperform' rating with the target pegged at Rs 325, implying a potential downside of over 22 per cent. The brokerage pointed out that the Quick commerce economics have been meaningfully challenged, with the wider-than-expected net loss in the segment.

Also, the brokerage stated that network expansion and competitive intensity impacted margins at the food delivery major. The brokerage noted that the period of hyper-competition is expected to last for a few more quarters. 

Further, it added that the company's food delivery business should realize margin guidance over a while. The brokerage in the space, prefers Zomato over Swiggy.

Bernstein also has maintained an 'outperform' call on the stock with the target slashed to Rs 575 from Rs 635 earlier.