Swiggy's stock crashes 12% to record low
What's the story
Swiggy's shares have witnessed a massive fall, plummeting nearly 12% today to hit a record low. The decline comes amid investor concerns over rising losses in its quick-commerce business, Instamart, and the high costs of competing in India's crowded instant-delivery market. The stock fell to an intraday low of ₹184.90, down ₹26.40 or 12.49% from its previous close of ₹211.30.
Stock trajectory
Stock down over 52% year to date
Swiggy's stock has been on a downward spiral for some time now.
It has fallen nearly 19% in the last five trading sessions, over 33% in the last month, and close to 37% in the last six months.
The decline has been even sharper this year with a year-to-date fall of 52.43%.
Financial concerns
Wider loss for Instamart raises investor concerns
The latest financial results show that Instamart, Swiggy's quick-commerce business, has witnessed a wider loss.
Its adjusted core loss for the September quarter rose to ₹895 crore from ₹849 crore last year.
This development has raised concerns among investors about how much more Swiggy may have to spend before Instamart can achieve sustainable profitability in the highly competitive instant-delivery market of India.
Market dynamics
Competition and expansion put profitability under pressure
The intense competition in the quick-commerce sector is also raising questions about profitability.
Both Swiggy and its rival Eternal have been aggressively expanding their dark-store networks as part of their growth strategy.
However, this aggressive expansion is keeping costs and profitability under scrutiny.
Investors are now looking for signs that sustained order value growth, improved customer retention, and higher store utilization can eventually lead to better margins for these companies.
Analyst outlook
Brokerages remain positive on long-term potential but reduce target prices
Despite the concerns, brokerages remain positive on Swiggy's long-term potential. However, they have lowered their target prices due to worries over the pace of profitability improvement.
Jefferies kept its 'buy' rating but reduced its target price to ₹330 from ₹435.
Emkay also maintained its 'buy' rating but cut its target price by 11% to ₹310, citing food delivery as a strong franchise with operating leverage and quick commerce as an optional growth driver.