Swiggy’s shares fell sharply on Friday, with investors signalling they are tiring of the cost of its quick-commerce push. The stock dropped 15% to ₹179.65 on the BSE, erasing roughly ₹9,000 crore in market value in a single session. Widening losses at Instamart overshadowed steady growth in the food delivery business.
The selloff followed a wave of brokerage target cuts after the company’s second-quarter results. JM Financial kept its “Reduce” rating and lowered its target to ₹200 from ₹255. Nuvama also cut its target to ₹200 from ₹255. Nomura stayed with a Buy rating but trimmed its target to ₹300 from ₹435, and Emkay Global reduced its price to ₹310 from ₹350.
The common worry was Instamart’s profitability. Net order value grew 13.4% from the previous quarter, but the contribution margin slipped to negative 1.4% from negative 0.3%. Adjusted EBITDA losses widened to ₹895 crore from ₹778 crore.
That growth was expensive. Swiggy added 69 dark stores during the quarter, taking its network to 1,240. Orders per store rose to 1,192 from 1,089, though analysts credited the improvement to aggressive spending. JM Financial summed up the quarter as “Losses delivered instantly” and said it was unconvinced about any real path to profitability in the foreseeable future, citing poor execution.
Management has offered a reassurance of sorts, saying Instamart’s losses peaked this quarter and that the business could break even at 2.3 times its current scale. That would mean annualized net order value of about ₹6,000 crore, against roughly ₹2,600 crore now. Breakeven would also need a contribution of ₹30 per order.
For investors, the problem is not only the size of the losses but how far away the finish line looks. Emkay said it would need to see sustained double-digit sequential growth, better customer retention, improved monetisation and higher store utilisation before giving the quick-commerce arm a richer valuation.
Swiggy’s experimental ventures are adding to the strain. Losses in Platform Innovations, which houses Toing, grew to ₹162 crore from ₹131 crore. JM Financial saw “zero rationale” for running Toing as a separate business, since it shares restaurant and delivery networks and customers with core food delivery. It warned of cannibalisation, rising cash burn and doubtful value creation, and urged Swiggy to shut Toing and put the resources into its main franchise.
That main franchise remains the bright spot. Food delivery gross order value rose 17.7% year-on-year to ₹10,054 crore, while adjusted EBITDA jumped 42% to ₹341 crore. The adjusted EBITDA margin improved to 3.4% from 2.8% a year earlier. Nomura called the segment a “cash cow” and expects it to generate ₹1,300 to ₹1,900 crore of EBITDA in both FY27 and FY28.
Yet even here, Swiggy trails its rival. Eternal’s food delivery grew 21.5%, compared with Swiggy’s 17.7%. In quick commerce, Eternal’s order value rose 22.2% sequentially, well ahead of Swiggy’s 13.4%.
That gap has sharpened a troubling question: is Swiggy losing ground in its core business while spending heavily to catch up elsewhere? Emkay still sees a strong food delivery franchise with quick commerce as an option on the future, but the market, it said, will want proof of sustained growth and better unit economics before it pays for that option.