While analysts noted innovations like Bolt and Instamart expansion, brokerages like Motilal Oswal maintained a neutral rating, citing competitive risks against Zomato and Blinkit.
The company’s loss stood at Rs 625.53 crore for the July-September 2024 period, up from Rs 611 crore in the previous quarter. However, this marks an improvement compared to the Rs 657 crore loss reported in Q2 FY24.
Meanwhile, Revenue from operations rose 11.77% quarter-on-quarter (QoQ) to Rs 3,601.45 crore from Rs 3,222.22 crore in Q1 FY25. On a year-on-year (YoY) basis, revenue recorded a significant 30.33% increase.
Swiggy’s overall gross order value (GOV) grew 30% YoY to reach Rs 11,306 crore while the consolidated adjusted EBITDA loss of Rs 341 crore represented a reduction in the net loss by 30% YoY, the company filing said. Platform average monthly transacting users (MTU) grew 19.2% YoY to 17.1 million.
Analysts at brokerage firm Nuvama Institutional Equities said the company’s Q2FY25 revenue of Rs 36 billion beat consensus estimate of Rs 35.4 billion, while reported PAT loss stood at Rs 6.3 billion against an estimate of Rs 6.4 billion loss.Swiggy has successfully piloted the Bolt program, enabling 10-minute food delivery to customers. Bolt has already achieved 5% of total orders with eight weeks of launch showing immense potential for a scale-up, brokerage firm Nuvama noted.“Bolt’s impact could be far-reaching; we wait and watch for now… While this could be a joker in the pack and could meaningfully impact food delivery volumes, we wait and watch how the AOVs for this service pan out,” said Motilal Oswal.
Motilal Oswal expects Swiggy’s food delivery orders to grow at 12.5% annually with an AOV growth of 1.4%, leading to a GOV growth of 14.1% over FY24-37, while the Q-commerce is expected to grow faster with orders increasing at 23.6% annually, AOV growth at 3.2%, and GOV growth at 27.6%.
“What was interesting, however, was Swiggy’s guidance for growing faster than the “category average” (aka Zomato) over the medium term in food delivery,” Motilal Oswal noted.
The brokerage said its DCF-based valuation of Rs 475 on the company suggests a 3% downside from the current price, as it reiterated a “neutral” rating on the stock.
Commenting on the company’s Q2 performance, MD & CEO Sriharsha Majety said the food business posted a remarkable show on the back of strong innovation and execution. “We are constantly trying to anticipate and improve the consumer’s experience. The recent launch of Bolt — our 10-minute delivery service — is an example of that. Similarly in quick commerce, we are anticipating and responding to consumer behaviour to bring more and more convenience to urban households. Instamart today is present in 54 cities and delivers more than 32,000 unique items, within an average delivery time of 13 minutes,” Majety said.
Swiggy’s Food delivery business witnessed a near doubling of profitability, with adjusted EBITDA clocking Rs 112 crore at a 1.6% margin. GOV grew steadily by 5.6% QoQ to Rs 7,191 crore.
The company recently launched ‘Bolt’, a 10-minute restaurant food delivery service, which already accounts for 5% of the overall food deliveries within 8 weeks of launch, the filing claimed.
Swiggy Instamart, the company’s quick commerce platform, witnessed an improvement in performance where its GOV growth accelerated to 24% QoQ to reach Rs 3,382 crore. The overall orders grew by 21% QoQ, with orders per dark store per day rising 10% QoQ.
Instamart added 12 cities and 52 stores during the quarter and improved its contribution margin by 124 bps QoQ to -1.9%.
Swiggy Instamart plans to double its dark store count by March 2025 versus 523 in March 2024, while increasing the average size of stores by 30-35%. As a result, the active dark store area will grow to over 2.5 times YoY to reach 4 million square feet by March 25.
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In the last 10 years, the company has reached 118 million users and processed nearly 3.5 billion orders.
The company’s board of directors on Tuesday also approved an investment of up to Rs 1,600 crore in the equity shares of Scootsy Logistics Private Limited, a wholly-owned subsidiary. The investment is expected to happen in one or more tranches, by way of subscription to rights issue.
The company will deploy up to Rs 1,350 crore from the IPO proceeds for the expansion of Instamart. It will invest another Rs 250 crores towards working capital infusion.
There will be no change in the shareholding of Swiggy in Scootsy.
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The board of directors also approved the formation of a wholly owned subsidiary to engage in sports team ownership, management, talent development, event organisation, and facility operation, among other things.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)