Swiggy losing Rs 18 for every Rs 100 gross sales on Instamart. Can investors make money?

Time of India

22-05-2025

India's quick-commerce clash is turning into a cash bonfire, and
Swiggy
is the one scorched. In the March quarter, every Rs 100 of gross order value (GOV) on
Swiggy Instamart
translated into Rs 18 in loss for the company, whose shares have lost half of their value in just five months.
Despite Instamart's GOV doubling year-on-year to Rs 4,670 crore (19.5% QoQ growth), this segment's adjusted EBITDA loss surged to Rs 840 crore, compared to Rs 307 crore a year ago and Rs 578 crore in the previous quarter.
Swiggy
management pinned this on growth investments and heightened competition. But investors are clearly running out of patience.
Swiggy shares have been anything but appetising lately—down 49% from its Rs 617 peak touched around last Christmas. Even from the IPO price of Rs 390, the stock has slipped 19%, leaving investors queasy and analysts sharpening their knives.
Take HSBC, which slashed its target price from Rs 385 to Rs 350, citing brutal cash burn and intensifying competition. 'Blinkit lost Rs 2 per Rs 100 of GOV, while Swiggy lost Rs 18,' HSBC's Prateek Maheshwari wrote, highlighting that Swiggy's QC business trades at a nearly 60% discount to Eternal's Blinkit.
'Cash burn for Swiggy was even higher than profit losses (operating losses). In terms of competitive intensity, while the next few months are tactically favourable for Blinkit and Swiggy IM, competition may get intense again in the second half of this year and next year (2026)," Maheshwari said.
Analysts warn that sustained profitability improvement may get delayed by another 12 months, warranting higher investor patience.
"During this period of stressed profitability, GOV market share must be the focus. If Blinkit could maintain its market share, the stock is unlikely to correct much as well. In the next 2-3 quarters, QC companies may focus on improving the through-put of recently added stores, and that would further depend on the retention rate of the recently acquired customers," the analyst said.
The gospel according to Jefferies? A clipped target of Rs 380 from Rs 400, with a cautious Hold rating. Meanwhile, BofA went even colder—cutting its target to Rs 295 and maintaining an Underperform. Their verdict: while contribution margins stayed flat, 'losses widened' due to higher discounts, ad blitzes, and a rush of store additions. Swiggy's NOV growth of 72% YoY was blown away by
Zomato
's 121%, with a stinging difference in margins: Swiggy at -18% vs Zomato's -1.9%.
According to Motilal Oswal, Instamart trails Blinkit on crucial metrics. GOV per dark store is 37% lower, and daily orders per store are 20% behind. No wonder Swiggy is bleeding harder. 'In the context of competition, Swiggy can ill afford to slow down on expansion,' Motilal noted. Still, they aren't giving up yet—watching AOV and dark store productivity closely before reassessing Swiggy's prospects.
Swiggy management insists the worst is over. 'Q4 has seen the peak of our growth investments,' the company had told investors, claiming that with improving take-rates, better AOVs, and tapering customer incentives, contribution margins should improve. They've marked the calendar: Contribution break-even is targeted in 3–5 quarters, with EBITDA breakeven tied closely behind.
Out of the 21 analysts covering Swiggy, a majority, 13, still have a Buy rating, 3 recommend Hold, and 5 say Sell, according to Trendlyne data.
With the quick-commerce pie expected to expand to a massive $30 billion by FY27, some analysts argue it's still early days—too soon to fixate on market share. 'This is not a 'winner takes most' market,' Motilal noted, suggesting retail and grocery have space for more than 5 players to co-exist.
While Swiggy is chasing scale and not profits for now, unless that Rs 18 loss per Rs 100 improves soon, investors might start asking whether the Instamart express is heading toward a dead end.