Buoyed by narrowing losses and robust revenue growth reflected in the financial results for the quarter ended September, Swiggy shares have rallied nearly 13% in the last two trading sessions.
The company reported that its revenue from operations grew 30% year-on-year (YoY) to Rs 3,601.5 crore, up from Rs 2,763.3 crore in Q2 FY24. Quarter-on-quarter (QoQ), revenue rose 11.77%.
Swiggyโs gross order value (GOV) surged 30% YoY to Rs 11,306 crore, and the platformโs monthly transacting users increased 19.2% YoY to 17.1 million, indicating steady user growth.
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Swiggy has successfully piloted the Bolt programme, enabling 10-minute food delivery to customers. Bolt has already achieved 5% of total orders within eight weeks of launch showing immense potential for a scale-up, brokerage Nuvama said.
Meanwhile, Swiggyโs quick commerce arm, Instamart, also saw significant traction, with GOV jumping 24% QoQ to Rs 3,382 crore. Instamart added 12 cities and 52 stores during the quarter and improved its contribution margin by 124 bps QoQ to -1.9%.
โBoltโs impact could be far-reaching; we wait and watch for nowโฆ While this could be a joker in the pack and could meaningfully impact food delivery volumes, we wait and watch how the AOVs for this service pan out,โ said Motilal Oswal.
Motilal Oswal expects Swiggyโs food delivery orders to grow at 12.5% annually with an AOV growth of 1.4%, leading to a GOV growth of 14.1% over FY24-37, while the q-commerce is expected to grow faster with orders increasing at 23.6% annually, AOV growth at 3.2%, and GOV growth at 27.6%.
โWhat was interesting, however, was Swiggyโs guidance for growing faster than the โcategory averageโ (aka Zomato) over the medium term in food delivery,โ Motilal Oswal noted. Despite the optimistic results, the brokerage maintained a โneutralโ rating on Swiggy, citing competitive risks from players like Zomato and Blinkit. The firm valued Swiggy at Rs 475 per share.
Swiggyโs plans for expansion include doubling its Instamart dark store count by March 2025 and investing Rs 1,600 crore in its subsidiary Scootsy Logistics for further growth. The company also announced the formation of a wholly-owned subsidiary for sports-related ventures.
Swiggy has reached 118 million users and processed nearly 3.5 billion orders in the last 10 years. The company’s board of directors on Tuesday also approved an investment of up to Rs 1,600 crore in the equity shares of Scootsy Logistics, a wholly owned unit. The investment is expected to happen in one or more tranches, by way of subscription to rights issue.
The company plans to deploy up to Rs 1,350 crore from the IPO proceeds for the expansion of Instamart. It will invest another Rs 250 crore towards working capital infusion.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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