Swiggy ditches growth for quick-commerce profitability, differentiation

Swiggy Ltd will focus on Instamart’s sustainable growth, chief executive Sriharsha Majety said in a letter to shareholders on Friday, highlighting intensifying competition in India’s instant commerce business.

The food delivery giant’s express trade business reported year-on-year growth of more than 53%. ₹1,057 crore, reducing losses by 4.5%. ₹736 crore.

“…in theory, significantly higher volumes can be achieved in the short term in a large addressable market,” co-founder, managing director (MD) and group chief executive officer (CEO) Majety said in the letter. “However, the sustainability of this approach is questionable given the high operating variable costs in the business…”

Swiggy reported a marginal sequential decline in flash trade gross order value. ₹7,881 crore in the March quarter. Total orders reached over 112 million, but average order value ₹than 700 ₹746 in the previous quarter.

company one ₹Management told analysts on the earnings call that there is a $1 trillion business opportunity in swing trading “over the medium term.”

“What we reiterate is that we are not going to go the growth acquisition route. That’s something we committed to a few quarters ago and we’ll continue to do that,” Majety said on the analyst call.

“CM (contribution margin) break-even point is also a [source] It is important to build a more durable business for our staying power in this business. We don’t yet know how many players will be on the other side of all this spending and the overall category. But what we learned from us [the growth in sectors like] “Modern commerce and telecommunications survive today, whoever gets clear early,” he added.

Instamart, meanwhile, is focusing on pot experiments alongside ‘different’ offerings such as its private label Noice, which sells everything from eggs and bread to packaged snacks and sauces.

Majety told analysts to expect more such offerings on Instamart in the next three to four months, but did not provide details. Noice and other ‘differentiated’ offerings are CM positive.

Skepticism continues

Competition in the flash commerce business is heating up with deep-pocketed rivals like Amazon, Flipkart and Reliance Retail investing more to expand. In April, Amazon said it would expand its express commerce arm Amazon Now to 100 cities, including Meerut, Panipat, Vizag and Mysuru.

The company is also expanding its dark store network to 1,000 “micro fulfillment centres” as part of the tech giant. ₹2,800 crore investment in the country.

This week, flash trading rival Zepto received approval for its initial public offering (IPO).

However, Swiggy is focusing on profitability rather than beating the competition. This has caused analysts who follow the stock to be skeptical.

“Instamart’s growth is expected to slow over the next few quarters due to lack of investment,” analysts at brokerage firm JM Financial wrote in an April 7 note, downgrading the stock to ‘Reduce’.

“This is because the company has chosen to focus on achieving its breakeven contribution margin guidance. [first quarter of FY27] This strategy is confusing to us (and to institutional investors as well, based on our recent interactions) because competitive dynamics have only hardened due to the aggressive expansion undertaken by traditional e-commerce players,” he said in the note.

Additionally, analysts said they do not foresee breaking even adjusted EBITDA levels in the next five years. “This leads us to believe that the business will continue to erode shareholder value for the foreseeable future. In this context, a merger and acquisition with a larger player remains, in our view, the only remaining option for value realization.” EBITDA is an abbreviation for earnings before interest, taxes, depreciation and amortization.

Food distribution is increasing

Amidst all this, Swiggy reported the highest gross order value in the last 15 quarters in its food delivery business. ₹9,005 crore in the fourth quarter, up 22.5% year-on-year. Revenue from food distribution operations increased over 27% ₹2,073 crore and 23% during the quarter ₹7,832 crore for the entire financial year. The segment, Swiggy’s largest and most profitable business, reported a 39% jump in quarterly profit. ₹306 crore.

“We have been working on this equation of speed, convenience and affordability for a while now,” said Rohit Kapoor, CEO of food marketplace Swiggy. Mint. “We’ve scaled up 99 Store, Bold, Eat Right, where we’ve seen an increase in certain trends in healthy eating, and we’ve made it very sustainable over the last four to six quarters.

“Our understanding of which product suits which consumer segment has become much sharper. Our MTU [monthly transacting users] It grew by 21% this quarter. We continue to improve all operating parameters. “It’s all coming together,” he added.

Overall, Swiggy reported a nearly 45% increase in revenue from operations. ₹6,383 crore for the quarter, while losses narrowed ₹800 crore. For FY26, Swiggy’s revenue from operations increased by more than 51% ₹23,053 crore, but losses increased by 33% ₹4,154 crore.

While Swiggy’s shares closed with a 1.18% increase in the stock markets, the Nifty 50 index remained flat.