“With a pause on darkish retailer growth and easing competitors, Q1 profitability seemingly marked the trough. Swiggy, nonetheless, stays liable to excessive volatility as a consequence of a low-margin base,” Jefferies stated whereas upgrading the inventory to ‘Purchase’ with a excessive risk-reward profile.
Through the morning session, Swiggy shares fell 4% to Rs 386.25 on the BSE as buyers tempered expectations. The meals supply enterprise’s contribution margin contracted 50 bps QoQ to 7.3%, which the administration attributed to seasonal rider availability points and one-off mounted price will increase tied to value determinations.
Jefferies stated it expects a 20% CAGR in meals supply income over FY25–28 in its base case. “Unit economics ought to steadily enhance with scale because it unlocks price efficiencies and as buyer willingness to pay for comfort will increase. We worth Swiggy’s meals supply enterprise at 38x Sep-27E adjusted EBITDA, fast commerce at 4x Sep-27E gross sales, SC&D at 0.5x Sep-27E gross sales, and OOH at 1x Sep-27E GOV to reach at a value goal of Rs 500,” it stated.
Home brokerage agency Motilal Oswal expects margins to rebound from Q2 onwards as working prices normalize, GOV scales additional, and platform improvements like Bolt ship incremental effectivity with out eroding profitability.
“We consider execution has improved notably, with the advance in QC AOV being an encouraging signal. We stay on the sidelines as a consequence of continued heightened competitors within the sector. Our goal value of Rs 450 implies an 11% upside from the present value. We reiterate our ‘Impartial’ ranking on the inventory,” Motilal stated.
