Swiggy Stock Trades Below Listing Price: What Should Investors Do?
Swiggy Stock : one of India’s leading food delivery and quick commerce platforms, made a promising stock market debut but has since faced a sharp decline. After listing at ₹412, with a modest 5.64% gain over its IPO price of ₹390, the stock surged to ₹617—an impressive 49.75% rise from its listing price. However, concerns over profitability and increasing competition have weighed on investor sentiment, leading to a significant drop. As of now, Swiggy is trading at ₹317, down 48.62% from its peak.
With such a drastic fall, investors are left wondering: Is Swiggy a buy at current levels, or should they remain cautious? Let’s analyze the reasons behind the decline, key financials, and expert opinions.
Why Is Swiggy Stock Falling?
- Unclear Path to Profitability
Despite strong revenue growth, Swiggy continues to post losses. Increased manpower costs and aggressive marketing spending have negatively impacted margins. Investors are wary of the company’s ability to turn profitable soon. - Intense Competition in Quick Commerce
Swiggy’s quick commerce arm, Instamart, faces stiff competition from Zomato’s Blinkit, Zepto, and cash-rich giants like Amazon, Flipkart, and Reliance. The battle for market dominance has affected Swiggy’s market share, leading to concerns over sustainability. - Broader Market Weakness
The Indian stock market has been under pressure due to foreign institutional investor (FII) outflows. A strengthening US dollar has made emerging markets less attractive, leading to a sell-off in high-risk stocks like Swiggy.
ICICI Securities’ Take on Swiggy Stock
Despite the recent downturn, ICICI Securities remains bullish on Swiggy, issuing a BUY rating with a target price of ₹740—a massive 131% upside from its current level of ₹320.
According to ICICI Securities:
- Swiggy’s food delivery segment saw its Gross Order Value (GOV) grow 3.4% QoQ and 19.2% YoY, with contribution margins improving to 7.4% (up 80bps QoQ).
- The quick commerce segment grew at a rapid pace, with GOV up 15.5% QoQ and 88.1% YoY. However, increased marketing and manpower expenses worsened contribution margins, which fell from -1.9% in Q2FY25 to -4.6% in Q3FY25.
Financial Performance
Swiggy’s financials reflect strong revenue growth but widening losses.
| Financial Metric | Q3FY24 | Q2FY25 | Q3FY25 | YoY Growth | QoQ Growth |
|---|---|---|---|---|---|
| Revenue (₹ Crore) | 3,049 | 3,601 | 3,993 | +30.96% | +10.88% |
| Net Loss (₹ Crore) | -574 | -626 | -799 | -39.19% | -27.64% |
| Food Delivery GOV Growth (YoY) | – | – | 19.2% | – | – |
| Quick Commerce GOV Growth (YoY) | – | – | 88.1% | – | – |
| Food Delivery Contribution Margin | – | – | 7.4% | – | – |
| Quick Commerce Contribution Margin | – | -1.9% | -4.6% | – | – |
Should You Buy, Hold, or Sell Swiggy?
Bullish Case: Why You Might Consider Buying
✅ Strong Market Position: Swiggy is a leading player in both food delivery and quick commerce, two sectors poised for long-term growth.
✅ Revenue Growth: The company is expanding rapidly, with a 31% YoY revenue increase.
✅ Analyst Optimism: ICICI Securities’ target of ₹740 suggests strong upside potential.
Bearish Case: Why You Should Be Cautious
❌ Persistent Losses: The company’s net loss widened to ₹799 crore in Q3FY25.
❌ Competition Pressure: With Zomato, Zepto, Amazon, and Reliance aggressively expanding, Swiggy’s market share could face further strain.
❌ Stock Market Volatility: Broader economic factors, including FII selling, could keep the stock under pressure.
Final Verdict: What Should Investors Do?
- Short-Term Traders: Swiggy remains highly volatile, making it risky for short-term trading. If you’re looking for quick profits, it’s best to wait for a clearer trend.
- Long-Term Investors: If you believe in Swiggy’s long-term potential and can handle short-term volatility, accumulating at lower levels could be an option. However, closely watch profitability trends.
- Risk-Averse Investors: Given the company’s increasing losses and competitive pressures, it might be safer to wait for stronger financials before investing.
Conclusion
Swiggy’s journey in the stock market has been a rollercoaster ride. While its long-term growth story remains intact, challenges like rising losses and market competition cannot be ignored. Investors should weigh the risks carefully and make informed decisions based on their risk appetite.
With expert recommendations suggesting a significant upside, Swiggy could be a potential long-term bet, but only for those willing to ride out the volatility.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.