Anand Rathi Share and Stock Brokers (ARSSBL) has a Buy on Swiggy, with a 30% upside and a target price of 400, against the current price of 308. Despite Instamart losses deepening, the brokerage is positive on Swiggy’s long term growth story, especially in Food Delivery and Supply Chain.
Market Snapshot & Valuation Lens
ARSSBL’s valuation exercise pegs Swiggy’s FY27 market cap at INR 92,800 crore, attributing this to:
- A 31.5x EV/EBITDA multiple on FD EBITDA of INR 1,018.3 crore
- 1.2x/1.0x EV/GOV on Quick Commerce (QC) and Dining Out (DO), respectively
- 0.5x EV/Sales on supply chain and platform innovation businesses
The brokerage has factored in a 30% valuation discount compared to Zomato, citing execution lags and margin headwinds in QC.
Key Financial Trends
Swiggy’s revenue growth remains robust, rising from INR 8,260 crore in FY23 to an estimated INR 25,630 crore by FY27, reflecting a compounded annual growth rate (CAGR) of over 30%. However, profitability remains elusive:
| Year | Revenue (INR Cr) | Net Profit (INR Cr) | RoE (%) | Adj. EBITDA Margin (%) |
| FY23 | 8,264.6 | (4,179.3) | (39.2) | (51.7) |
| FY24 | 11,247.4 | (2,350.2) | (27.9) | (19.6) |
| FY25 | 15,226.8 | (3,105.1) | (34.5) | (18.3) |
| FY26e | 19,935.7 | (2,173.0) | (23.8) | (9.0) |
| FY27e | 25,629.2 | (717.6) | (9.3) | (1.0) |
Gross margins improving (59.1% in FY23 to 63.5% in FY27e) but still loss making due to high operating expenses and investments in QC.
Food Delivery (FD): The Bright Spot
Swiggy’s FD business has been showing consistent improvement. In Q4 FY25, GOV (Gross Order Value) hit INR 7,350 crore, a 17.6% YoY growth, outpacing Zomato’s 15.9%:
- Monthly Transacting Users (MTUs) increased to 1.51 crore
- Contribution margins rose to 7.8%
- Adjusted EBITDA margin stood at 2.9%, up from 0.5% in Q4 FY24
This growth has been driven by the expansion of its “Bolt” 10-15 minute delivery model, now accounting for over 12% of volumes.
Instamart: A Persistent Drag
Swiggy’s QC arm, Instamart, tells a more challenging story. Although dark store count rose sharply from 523 to 1,021 in FY25, execution lags behind Blinkit:
- Q4 FY25 GOV grew 101% YoY to INR 4,670 crore, still trailing Blinkit’s 134% rise
- AOV (Average Order Value) was INR 527, vs. Blinkit’s INR 665
- Contribution margin stood at -5.6%, with an adjusted EBITDA margin of -18.0%
ARSSBL now expects Instamart to break even by FY28 instead of the earlier FY27 estimate, reflecting ongoing inefficiencies and cost pressures.
Segment Revenue Breakdown (FY25)
- Supply Chain & Distribution: 42.2%
- Food Delivery: 41.7%
- Quick Commerce (Instamart): 14.0%
- Dining Out: 1.6%
- Platform Innovation: 0.6%
Balance Sheet Highlights
- Net worth to fall from INR 10,220 crore in FY25 to INR 7,330 crore by FY27
- Cash reserves projected to decline from INR 3,300 crore to INR 510 crore over the same period
- Negative net debt/equity maintained, indicating no leverage strain despite negative free cash flow
Swiggy Post-IPO Performance
Swiggy launched its IPO on 6 November 2024 with an issue size of INR 11,327.43 crore. The IPO was a mix of Fresh Issue (INR 4,499 crore) and OFS (INR 6,828.43 crore). The IPO was subscribed 3.59X and was listed at a 16.9% premium over investment. The stock made its all-time high of INR 597.45 per share on 20 December 2024, reflecting a 53% return from its allotment price of INR 390 per share. Currently, it is trading around INR 314.5 per share (~19% down from its IPO allotment price).
Key Risks
ARSSBL outlines multiple headwinds:
- Fierce competition in QC: Blinkit, Zepto, Amazon, and Flipkart Minutes continue to expand aggressively.
- Unit economics pressure: New dark stores risk dragging per-store metrics and raising fixed costs.
- Macro slowdown: Any persistent drag in consumption could dent Swiggy’s core FD business.
Strategic Takeaway
Despite pressing short-term profitability concerns, Anand Rathi maintains its long-term confidence in Swiggy’s diversified revenue streams, tech-driven delivery efficiency, and improving FD unit economics. The report emphasizes a measured optimism, recognizing the firm’s structural strengths while cautioning against persistent execution lags in Instamart.
The lowered INR 400 target price represents a 30% upside from the CMP of INR 308, reaffirming the brokerage’s bullish stance—albeit with an eye on quick commerce’s evolving battlefield.