The Swiggy share price has slipped by over 1% in trade today. With new entrants in the food delivery business, the company is facing hard times, as evidenced by its share price. It has erased 37% of shareholders’ wealth in the last six months. JM Financial has downgraded Swiggy to a ‘Reduce’ rating from ‘Add’.
Further, the domestic brokerage house has slashed the target price to Rs 270, a drop of 27% from the previous target price of Rs 370, implying no upside potential from current levels.
JM Financial on Swiggy: What’s the big worry now
JM Financial pointed out that despite a fortified balance sheet following the recent fundraise, “the management’s apparent reluctance to compete full-on is racking up market share loss.” In fact, JM Financial fears that this “strategy, if not recalibrated, would put the business in an orbit of irrelevance soon, particularly as traditional e-commerce incumbents accelerate their QC expansion.”
As a result, they believe that any near-term narrowing of absolute losses should be seen as a temporary patch-up rather than a sustainable structural gain. Given no clear visibility of a credible turnaround, JM Financial pointed out that “Instamart, with its current strategy, will only destroy value for Swiggy shareholders, even if its food delivery (FD) segment surprises positively. Under these circumstances, the best possible outcome for investors, in our view, is to hope that a larger player acquires Swiggy.”
Instamart’s growth-profitability deadlock
Swiggy is currently prioritising a contribution margin breakeven for Instamart (expected by Q1 of FY27) by trading off growth. This strategy has stunted the scale-up necessary for long-term viability and resulted in a steady loss of market share.
Intensifying competition
The company faces hard competitive dynamics as traditional e-commerce incumbents aggressively expand their quick commerce (QC) operations. Additionally, new entrants like Rapido and Flipkart are threatening the food delivery segment, which was previously a stable duopoly.
No visibility on EBITDA breakeven
While management is focused on near-term contribution margins, there is no clear visibility for adjusted EBITDA breakeven for Instamart or the group as a whole. Analysts at JM Financial expect that consolidated adjusted EBITDA will remain negative at least through FY29.
Value destruction in non-food segments
The brokerage house has assigned zero value to Instamart, the supply chain, and platform innovations segments in their valuation. Analysts argued that these segments currently erode shareholder value, and even a fortified balance sheet is seen as temporary since continued losses will likely deplete cash reserves.
Lowered valuation multiples for food delivery
Despite the food delivery business remaining operationally resilient, JM Financial cut its target adjusted EBITDA multiple for this segment from 45x to 38x. This reduction reflects the emerging threat of new competition and the fact that food delivery profits are insufficient to offset losses in other business areas.
Swiggy share price performance
The share price of Swiggy has risen almost 5% in the last five trading days. The stock has declined 10% in the past one month and erased over 37% of investors’ wealth in the last six months. Swiggy’s stock price has declined 20% over the previous 12 months.
Swiggy Q3FY26 results
The company’s net loss widened by 33% year-on-year (YoY) to Rs 1,065 crore in Q3 of FY26, up from Rs 799 crore in the same period a year ago. However, the firm’s net loss narrowed sequentially, from Rs 1,092 crore in the previous quarter, as strong demand in its quick‑commerce arm Instamart partly offset the drag from continued high investments.
The firm’s revenue from operations surged 54% YoY to Rs 6,148 crore in Q3, up from Rs 3,993.1 crore a year ago.
Meanwhile, its total expenses increased nearly 49% YoY to Rs 7,298 crore in the quarter ended December, up from Rs 4,898.3 crore a year ago.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.