Shares of food delivery aggregator Swiggy Ltd. will be reacting to their June quarter results on Friday, August 1, after its net loss doubled from the same period last year. Despite this, majority of the analysts having coverage on the stock, continued to maintain their optimism.Swiggy reported a net loss of ₹1,197 crore, compared to a loss of ₹611 crore it had reported during the same quarter last year. The losses were led by the Quick Commerce division “Instamart”, where the losses widened from the year-ago quarter.
Swiggy’s Quick Commerce loss on an Earnings Before Interest and Tax basis (EBIT) widened to ₹797 crore from a loss of ₹379 crore last year.
Revenue rose to ₹4,961 crore from ₹3,222 crore during the same quarter last year, implying a growth of 54%. EBITDA was a loss of ₹954 crore from a loss of ₹544 crore during the same quarter last year.Global brokerage firm Jefferies has upgraded Swiggy to ‘Buy’ and raised its price target to ₹500, citing a high risk-reward play.
The brokerage said that food delivery saw strong growth in Q1, while momentum remained intact in the quick commerce (Q/C) segment, supported by a smart expansion in average order value (AOV).However, EBITDA margins declined sequentially in both segments, which the management attributed to factors such as higher rider payouts and revised staff compensation.
Swiggy’s Quick Commerce loss on an Earnings Before Interest and Tax basis (EBIT) widened to ₹797 crore from a loss of ₹379 crore last year.
Revenue rose to ₹4,961 crore from ₹3,222 crore during the same quarter last year, implying a growth of 54%. EBITDA was a loss of ₹954 crore from a loss of ₹544 crore during the same quarter last year.Global brokerage firm Jefferies has upgraded Swiggy to ‘Buy’ and raised its price target to ₹500, citing a high risk-reward play.
The brokerage said that food delivery saw strong growth in Q1, while momentum remained intact in the quick commerce (Q/C) segment, supported by a smart expansion in average order value (AOV).However, EBITDA margins declined sequentially in both segments, which the management attributed to factors such as higher rider payouts and revised staff compensation.
Jefferies believes that with a pause in dark store expansion in the short term and easing competitive intensity, Q1 likely marked the bottom for profitability.
Meanwhile, Morgan Stanley has an ‘Overweight’ rating on Swiggy, with a price target of ₹450.
According to the brokerage, growth in food delivery is tracking in line with expectations, although it now anticipates a slower pace of margin improvement.
With solid unit economics in Q1 and strong commentary for Q2, Morgan Stanley has raised its profitability assumptions for the quick commerce business and revised down its loss estimates.
Shares of Swiggy settled 0.7% higher at ₹403.95 on Thursday. The stock remained above its IPO price of ₹390. Shares are down 25% so far this year.
