Swiggy shares: Decline 8% post Q3 results, Should you buy or sell?

Shares of Swiggy plunged 8 per cent in early trade on Thursday on reporting ₹799 crore loss in the quarter ended December 2024 as against ₹574.3 crore in the corresponding quarter previous year. 

However, its revenue from operations was up 31 per cent at ₹3993.1 crore in the quarter under review as against ₹3048.6 crore in the corresponding quarter previous year. 

Brokerages have maintained their stance at lowered target prices, flagging issues such as aggressive dark store additions and increasing competitive intensity affecting margins to persist in the next quarter.

Domestic brokerage Motilal Oswal has reiterated neutral rating on the stock at a reduced target price of ₹460 from ₹520 earlier. Motilal believes that the food delivery business remains a stable duopoly; however, increased competition and aggressive dark store expansion have rebased profitability expectations for the quick commerce sector in the near term. 

The brokerage stated that Swiggy’s Bolt and 10-minute food delivery could lead to lower average order value (AOV) growth, however hailing the latter as it reignites competition in the food-delivery space.

• Also read: SBI Q3 results preview: Bank may report a net profit of about ₹16,000 crore, per analyst estimates

Analysts of Nuvama Institutional Equities remarked that the dark store expansion accelerated in the second half of the quarter and picked up further in January, creating a headwind for Q4. The brokerage has not rated the stock.

Global brokerage Macquarie has maintained underperform rating on Swiggy at a target price of ₹325, emphasising that the network expansion and competitive intensity impacted margins. The brokerage added that the period of hyper-competition is expected to prolong for a few more quarters and reinstated that it prefers Zomato stock over Swiggy.

UBS has retained buy at a target price of ₹515. It stressed that the food-delivery platform has not upgraded plans for dark store expansion, unlike its rival Zomato.

Meanwhile, Bernstein has an outperform rating at a target price of ₹575 from ₹635 earlier.

Rebounding from early loss hitting a low of ₹385.25, the stock traded 4.15 per cent lower at ₹400.70 on the NSE at around 10.30 am.

Rival Zomato shares traded flat at ₹232.40 at the time of writing. The company, by the end of January 2025, posted a 57 per cent decline in consolidated net profit for the December quarter at ₹59 crore.