Swiggy shares rally over 11%, extend gains after narrowing quarterly losses

Newly-listed Swiggy shares climbed as much as 11.4% on Thursday to Rs 576.95 on the BSE, extending a results-driven rally into a second session, as the food delivery giant saw its losses during the July-September quarter narrow 5% to Rs 625.53 crore, from Rs 657 crore in the year-ago period.

Buoyed by narrowing losses and robust revenue growth reflected in the financial results for the quarter ended September, Swiggy shares have rallied nearly 13% in the last two trading sessions.

The company reported that its revenue from operations grew 30% year-on-year (YoY) to Rs 3,601.5 crore, up from Rs 2,763.3 crore in Q2 FY24. Quarter-on-quarter (QoQ), revenue rose 11.77%.

Swiggy’s gross order value (GOV) surged 30% YoY to Rs 11,306 crore, and the platform’s monthly transacting users increased 19.2% YoY to 17.1 million, indicating steady user growth.

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Swiggy has successfully piloted the Bolt programme, enabling 10-minute food delivery to customers. Bolt has already achieved 5% of total orders within eight weeks of launch showing immense potential for a scale-up, brokerage Nuvama said.

Meanwhile, Swiggy’s quick commerce arm, Instamart, also saw significant traction, with GOV jumping 24% QoQ to Rs 3,382 crore. Instamart added 12 cities and 52 stores during the quarter and improved its contribution margin by 124 bps QoQ to -1.9%.

“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. Despite the optimistic results, the brokerage maintained a “neutral” rating on Swiggy, citing competitive risks from players like Zomato and Blinkit. The firm valued Swiggy at Rs 475 per share.

Swiggy’s plans for expansion include doubling its Instamart dark store count by March 2025 and investing Rs 1,600 crore in its subsidiary Scootsy Logistics for further growth. The company also announced the formation of a wholly-owned subsidiary for sports-related ventures.

Swiggy has reached 118 million users and processed nearly 3.5 billion orders in the last 10 years. 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, a wholly owned unit. The investment is expected to happen in one or more tranches, by way of subscription to rights issue.

The company plans to deploy up to Rs 1,350 crore from the IPO proceeds for the expansion of Instamart. It will invest another Rs 250 crore towards working capital infusion.

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