- Swiggy’s cash balance is Rs 53.5 billion with a burn rate of Rs 30-32 billion over four quarters
- Quick commerce net order value grew 18.2% QoQ, lagging Blinkit’s 25% growth
- Food delivery gross order value rose 18.8% YoY to Rs 80.9 billion in Q1
While food delivery remains stable; execution gap in quick commerce continues to widen vs Blinkit. Swiggy's cash balance remains uncomfortably low relative to the expected burn for the next four quarters.
NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
HDFC Securities Report
Our previous upgrade note on Swiggy Ltd. (May-25) was primarily a bet on capturing some quick commerce value (available for free then). Since then (up 33%), most of the low-hanging fruits (in terms of returns) seem captured and hereon its essentially a race against time. Can Swiggy's cash balance last the current burn rate (Cash: Rs 53.5 billion, we estimate ~Rs 30-32 billion burn over next four quarters).
Sure, the Rapido stake (~12%) monetization could help; but its cutting it too close for us to be comfortable taking this bet. Hence, we downgrade Swiggy to Add rating (earlier: Buy) with an SOTP-based target price of Rs 400/share (unchanged); implying 4x Jun-27 EV/sales (includes 43x Jun-27 EV/Ebitda for food delivery; 1x Jun-27 NOV).
On the Q1 print, overall B2C gross order value grew 45.2% YoY (14.8% QoQ) to reach Rs 147.9 billion (in-line). Food delivery GOV grew 18.8% YoY to Rs 80.9 billion (our estimate: Rs 80.5 billion), driven by monthly transacting user addition. FD's adjusted Ebitdam declined QoQ by 51 bps to 2.4%, due to seasonal factors such as elevated delivery partner incentives and annual appraisals in Q1.
Instamart's performance continues to lag that of Blinkit. Quick commercial NOV grew 18.2% QoQ vs Blinkit's 25%. QC adjusted Ebitda losses widened QoQ to Rs 8.96 billion (Rs 8.4 billion in Q4; our estimate: Rs 8.89 billion). Q1 net losses stood at Rs 11.97 billion (our estimate: Rs 9.5 billion).
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
