Swiggy’s Growth Outlook Strong But Profitability Concerns Persist, Says Jefferies

Jefferies has initiated coverage on Swiggy Ltd., assigning a 'Hold' rating with a target price of Rs 400, highlighting the company’s strong position in India’s hyperlocal market.

Swiggy, with a 45% share in food delivery, is expected to see high-teens growth in this segment over the medium term, along with margin expansion, the brokerage said in its note on Wednesday.

The company’s food delivery business, alongside Zomato, dominates India’s online food delivery duopoly, with Swiggy’s GMV forecasted to reach $3.4 billion by financial year 2025. Expected improvements in margin efficiency, driven by higher take rates and reduced discounts, should lead to a 72% CAGR in Ebitda over financial year 2025-2027, it added.

According to Jefferies, Swiggy’s quick commerce segment also presents tremendous growth potential, with its Instamart business reaching $2 billion in GMV. However, the quick commerce market is highly competitive, with rivals like Zomato's Blinkit and Zepto.

Swiggy’s quick commerce segment continues to operate at a loss, a trend expected to persist through financial year 2026, with improvement anticipated by financial year 2027. Additionally, e-commerce giants like Flipkart and Amazon entering the market could further intensify competition, the brokerage noted.

Swiggy also operates in online dining and supply chain services, but these segments remain relatively small.

Despite being a significant player, Swiggy’s profitability remains under pressure, and the company is expected to report negative Ebitda and free cash flow through fiscal 2027. While Swiggy remains net cash positive in the medium term, Jefferies’ cautious outlook reflects competition risks in quick commerce.