Food delivery and quick commerce platform Swiggy is in focus. In the latest report, the brokerage house Nuvama has retained a positive stance on the stock despite continued losses in its quick commerce business.

The optimism comes at a time when competition in food delivery and instant grocery delivery remains intense, with companies spending aggressively to retain users and improve market share. 

However, according to the brokerage report, Swiggy’s improving profitability trends in food delivery and narrowing losses in Instamart are key reasons behind its constructive outlook.

Nuvama retains ‘Buy’ rating on Swiggy

Nuvama has maintained a ‘Buy’ rating on Swiggy and revised its target price to Rs 477. This implies an upside potential of nearly 70% from the current market price.

According to the brokerage report, Swiggy’s Q4FY26 performance remained largely in line with expectations, with growth across food delivery, quick commerce and out-of-home businesses.

The brokerage stated, “We are tweaking FY27E/28E EBITDA by +4.6%/+1.3% factoring in growth moderation with margin trajectory unchanged; retain ‘Buy’.”

As per the report, the stock is currently trading at nearly 1.8 times FY28 estimated enterprise value-to-sales ratio.

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Let’s take a look at key reasons driving the brokerage’s optimism

#Food delivery business continues to improve

Nuvama in its report added that Swiggy’s core food delivery business remains one of the biggest strengths for the company.

Gross Order Value (GOV) from food delivery stood at around Rs 9,010 crore in Q4FY26 This translates to a growth of nearly 23% year-on-year. The Monthly Transacting User (MTU) base also increased to 1.83 crore users during the quarter.

The brokerage noted that profitability in the food delivery business improved further because of better delivery cost efficiency, rising advertisement revenue and controlled discount spending.

Nuvama stated, “Food delivery improved across all metrics.”

According to the brokerage report, adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) margin as a percentage of GOV expanded to 3.3% during the quarter.

Management has also reiterated its guidance of 18-20% year-on-year growth in food delivery while targeting medium-term EBITDA margins of nearly 5%.

#Instamart losses narrowing as focus shifts to profitability

Quick commerce business Instamart continues to remain a key focus area for investors.

According to the Nuvama report, Instamart’s GOV rose nearly 69% year-on-year to around Rs 7,880 crore during the quarter. Order volumes also increased steadily, though average order values declined slightly because of seasonal factors.

The brokerage highlighted that Swiggy has now shifted its focus from rapid expansion to improving profitability and customer retention.

Nuvama added, “Focus remains on chasing quality growth in Quick Commerce.”

The report noted that Swiggy significantly slowed dark store expansion during the quarter, adding only seven stores in Q4FY26. As per the brokerage report, the company is now focusing more on improving utilisation levels and operational efficiency across its existing network.

Contribution margin in Instamart improved to negative 1.8% from negative 2.5% earlier, while adjusted EBITDA margins also improved sequentially.

According to the brokerage report, management is targeting contribution margin breakeven in the first quarter of FY27.

#Out-of-home and supply chain businesses add support

Apart from food delivery and Instamart, Swiggy’s other businesses also reported healthy growth momentum.

According to the brokerage report, Swiggy’s out-of-home business reported nearly 43% growth in GOV and close to 60% growth in revenue on a year-on-year basis.

The brokerage also highlighted strong growth in supply chain distribution revenue during the quarter.

Nuvama stated, “Supply chain distribution revenue soared 56.4% YoY.”

At the same time, the brokerage noted that platform innovation revenue declined sharply during the quarter, which remains an area to monitor going forward.

What investors needs to watch

As per Nuvama report, Swiggy’s future growth outlook remains linked to improving profitability in food delivery, narrowing losses in Instamart and rising user engagement across its platforms.

However, competition in quick commerce, high spending on promotions and changing consumer behaviour will remain key factors for investors to track over the coming quarters.

Disclaimer: The information provided includes specific investment ratings, price targets, and financial projections for Swiggy. This content is for informational purposes only and does not constitute a formal offer, solicitation, or recommendation to buy or sell any security. Stock market investments are subject to market risks; please consult a SEBI-registered investment advisor before making any financial decisions based on brokerage reports or price targets.

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