The share price of Bengaluru-based online food delivery service Swiggy declined sharply to hit a new 52-week low after it announced Q3 FY25 results. The company reported a net loss of ₹799 crore, up 39% from a loss of ₹574 crore in the same quarter last year. Even though operating revenue grew 31% year-on-year to ₹3,993 crore from ₹3,049 crore in Q3 FY24, concerns over widening losses and margin pressures have adversely impacted market confidence. On BSE4, the stock declined sharply to hit a new 52-week low of ₹387.00, down 7.43%.
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Major Financial Highlights from Q3 FY25
Swiggy showed growth in several key areas despite the widening net loss. The company's operating revenue was ₹3,993 crore, up 31% over the previous year. Additionally, there was a significant increase in gross order value (GOV), which grew 38% year-on-year to ₹12,165 crore. Nevertheless, the combined adjusted EBITDA loss widened sequentially to ₹149 crore.
- Revenue: Increased 31% YoY to ₹3,993 crore.
- Net Loss: Widened 39% YoY to ₹799 crore.
- Gross Order Value (GOV): Grew 38% YoY to ₹12,165 crore.
Factors Contributing to the Decline
Swiggy's stock price has fallen due to several issues. These include expanding dark stores, pressure on margins, competition, and rising losses. The company's strong investment in the development of dark shops and the increasing level of competition have led to a sharp increase in its financial losses. Profit margins have been pressured by the growth of rapid commerce, which includes marketing and dark shopfronts.
Fierce competition in the fast commerce and food delivery industries further affects profitability. Due to tough competition from Blinkit and Zepto, Swiggy's rapid commerce division, Instamart, has seen significant expenditures that have put pressure on profits.
Brokerage Opinions and Analysis
Brokerage firms have expressed mixed views on Swiggy shares after the third quarter results. Maintained a target price of ₹515 and assigned a "buy" rating. Declared a price target of ₹325 and reiterated an "underperform" stance. The growth of Swiggy's dark stores was identified as a major hurdle for the March quarter.
Impact of Dark Store Expansion on Margins
A major issue affecting Swiggy's profits has been the company's rapid growth of its network of dark stores. Although the firm wants to use Instamart to increase its market share in fast-growing commerce, the significant costs associated with opening and running these dark shopfronts have made profitability difficult.
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