Swiggy Shifts Priorities, Emphasizing Profitability and Diversification Over Rapid Expansion

Swiggy Focuses on Sustainable Growth Amid Intensifying Competition in Quick-Commerce

Swiggy Ltd, the Indian food delivery giant, has flagged the intensifying competition in the country's quick-commerce business, with its chief executive, Sriharsha Majety, emphasizing the need for sustainable growth in its Instamart business. In a shareholders' letter on Friday, Majety noted that the company's quick-commerce business reported a more than 53% jump year-on-year to ₹1,057 crore, while reducing losses by 4.5% to ₹736 crore.

Quick-Commerce Business Performance

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Swiggy's quick-commerce business reported a marginal sequential decline in gross order value to ₹7,881 crore in the March quarter. Total orders grew to over 112 million, although the average order value dropped to ₹700 from ₹746 in the previous quarter. The company sees a ₹1 trillion business opportunity in quick commerce in the 'medium term', the management told analysts in an earnings call.

Focus on Sustainability

Swiggy has chosen not to take the route of buying growth, instead focusing on building a more durable business. The company's management has emphasized the importance of achieving a contribution margin (CM) breakeven, which is expected to happen by the first quarter of FY27. This strategy has made analysts tracking the stock sceptical, with some downgrading the stock to 'Reduce' due to the lack of investments in Instamart.

Food Delivery Business

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Amid the competition in the quick-commerce business, Swiggy's food delivery business reported a 15-quarter high in gross order value for the fourth quarter, up 22.5% on-year to ₹9,005 crore. Revenue from food delivery operations rose over 27% to ₹2,073 crore during the quarter and 23% to ₹7,832 crore for the full fiscal year. The segment, Swiggy's largest and most profitable business, posted a 39% rise in quarterly profit to ₹306 crore.

Revenue and Losses

Swiggy reported a nearly 45% jump in revenue from operations to ₹6,383 crore for the quarter, while losses narrowed to ₹800 crore. For FY26, Swiggy's revenue from operations grew more than 51% to ₹23,053 crore, but losses grew 33% to ₹4,154 crore. Swiggy's shares closed 1.18% higher on the stock exchanges, while the benchmark Nifty 50 remained flat.