Market share gain in food delivery is encouraging; however, challenging macros continue to weigh on the food delivery business, and Swiggy believes growth could slow down for the industry as a whole despite the recent consumption push.
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Motilal Oswal Report
Swiggy Ltd. delivered a revenue of Rs 39.9 billion in Q3 FY25 (up 11% QoQ) versus our estimate of Rs 38.9 billion. The food delivery business’s gross order value grew 19.2% YoY, whereas the contribution margin was 7.4%, recording 80bp QoQ expansion. Food delivery’s adjusted Ebitda as a % of GOV margin rose 90 bp QoQ to 2.5%.
Instamart’s GOV was Rs 39.0 billion (+88.1% YoY), which missed our estimate. The contribution margin dipped 270bp QoQ to -4.6%. Adjusted Ebitda as a % of GOV was -14.8% (-10.6% in Q2), missing our estimate of -10.0%.
Overall, Swiggy reported a net loss of Rs 8 billion, marking a 39% YoY increase.
For Q4 FY25, we expect revenue/adjusted Ebitda loss to increase 7.0%/14.5% QoQ. Our DCF-based valuation of Rs 460 (Rs 520 earlier) suggests a 10% potential upside. We reiterate our Neutral rating on the stock.
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