Is Swiggy on Track to Become Profitable? Key Insights from Management
Is Swiggy on Track: one of India’s leading food delivery and quick commerce giants, has outlined a roadmap to profitability, projecting positive earnings by late 2025. Despite reporting widening losses, the company remains optimistic about its long-term growth, driven by strategic investments, improved operational efficiency, and a disciplined approach to expansion. With a clear focus on stabilizing margins and optimizing its dark store operations, Swiggy aims to strengthen its position in the highly competitive food delivery and quick commerce market.
Swiggy’s Profitability Outlook: Management’s Perspective
Swiggy’s management has set a target to achieve positive adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) by Q3 of FY26. CFO Rahul Bothra acknowledged that the company’s increasing losses stem from significant investments in both its core food delivery business and quick commerce segment. Additionally, ESOP (Employee Stock Ownership Plan) charges have added to the net losses. However, adjusted EBITDA saw an improvement of ₹149 crore in the last quarter, driven by increased depreciation due to investments in warehousing and dark store infrastructure.
To counter margin pressures and enhance operational efficiency, Swiggy has slowed down its aggressive dark store expansion. The company remains confident in achieving group-level breakeven, supported by steady revenue growth and improved cost optimization strategies.
Swiggy’s Stock Performance and Market Sentiment
Swiggy’s stock has witnessed a significant drop, falling 7.84% to ₹385.25 per share from its previous close of ₹418.05 per share. As of February 6, 2025, Swiggy’s market capitalization stands at approximately ₹89,736 crore.
Despite the recent stock decline, global investment firm UBS has maintained a ‘Buy’ rating on Swiggy, setting a target price of ₹515 per share, which implies a potential upside of 33.67%. Analysts believe that while margin pressures persist in the short term, Swiggy’s strategic moves toward operational efficiency and cost management will help it achieve profitability in the long run.
Financial Performance: Q3 FY25 Highlights
Swiggy’s financial performance in Q3 FY25 reflects robust revenue growth but also widening losses:
- Revenue: ₹3,993 crore (31% YoY growth from ₹3,049 crore in Q3 FY24)
- Quarterly Growth: 11% QoQ increase from ₹3,601 crore in Q2 FY25
- Net Loss: ₹799 crore (Higher than ₹611 crore in Q3 FY24 and ₹626 crore in Q2 FY25)
While revenue growth remains strong, the increasing losses indicate ongoing financial strain, primarily due to rising infrastructure costs and investments in quick commerce.
Swiggy vs. Zomato: A Strategic Comparison
Swiggy and Zomato continue to dominate the Indian food delivery and quick commerce market. However, their strategies differ significantly:
- Dark Store Expansion: Unlike Zomato’s Blinkit, Swiggy has paused further dark store expansion after adding 90 new dark stores in January 2025, nearly matching its Q3 FY25 total. The company aims to reach 4 million sq ft of active dark store space by March 2025.
- Profitability Goals: Swiggy is targeting profitability by late 2025, whereas Zomato has already achieved breakeven in its food delivery business.
- Market Share & Growth Strategy: Swiggy focuses on deepening its existing operations and stabilizing margins, while Zomato continues expanding aggressively in the quick commerce segment.
Despite differing approaches, both companies are capitalizing on India’s booming quick commerce industry.
Market Outlook: The Growth of Quick Commerce in India
The quick commerce industry has transformed India’s retail and last-mile delivery landscape, driven by increased mobile internet penetration and changing consumer preferences. This shift, accelerated by the COVID-19 pandemic, has led to surging demand for instant deliveries, especially for groceries and perishable items.
Key industry trends include:
- Rapid Market Growth: The quick commerce sector is projected to grow at a 27.9% CAGR through 2027.
- Technology-Driven Efficiency: Companies are leveraging advanced algorithms, AI-powered route optimization, and warehouse automation to ensure ultra-fast deliveries.
- Competitive Landscape: Major players like Swiggy Instamart, Zomato Blinkit, and Dunzo continue to innovate and expand, shaping the future of quick commerce in India.
Swiggy’s strategic focus on improving its unit economics, enhancing delivery efficiency, and reducing costs positions it well for long-term sustainability.
Key Financial Ratios and Stock Insights
| Financial Metric | Value |
|---|---|
| Market Cap | ₹88,027 Cr. |
| Current Price | ₹389 |
| 52-Week High/Low | ₹617 / ₹385 |
| Stock P/E | – |
| Book Value | ₹31.6 |
| Dividend Yield | 0.00% |
| Return on Capital Employed (ROCE) | -24.4% |
| Return on Equity (ROE) | – |
| Face Value | ₹1.00 |
| Industry P/E | 48.4 |
| Debt | ₹1,044 Cr. |
These financial indicators highlight Swiggy’s current valuation, showing its growth potential while also reflecting the challenges it faces in achieving profitability.
Final Thoughts: Can Swiggy Turn Profitable?
Swiggy’s journey toward profitability is marked by strong revenue growth, cost optimization efforts, and a strategic slowdown in dark store expansion. While the company continues to incur losses, its improving adjusted EBITDA and focus on operational efficiency signal a positive outlook.
Key takeaways:
✔ Swiggy aims to achieve positive adjusted EBITDA by Q3 FY26
✔ Revenue continues to grow despite increasing losses
✔ Strategic cost-cutting and operational efficiency are key focus areas
✔ The quick commerce sector remains a high-growth industry with strong demand
With steady execution and disciplined financial management, Swiggy has the potential to achieve profitability and solidify its position as a leading player in India’s food delivery and quick commerce ecosystem.
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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.