Axis Capital expects Swiggy’s revenue to grow at a 38% compound annual growth rate between financial years 2023-24 and 2026-27, with quick-commerce revenues growing at 84% and food delivery at 23%.

Shares of Swiggy Ltd rose as much as 6.18% in intraday trade on Monday after Axis Capital initiated coverage on the stock with a ‘buy’ rating. The brokerage has set a target price of ₹640 on Swiggy, implying a potential upside of 20% compared to the food delivery company's previous closing price of ₹532.50.

The Bengaluru-based food tech giant reported a consolidated net loss of ₹625.5 crore for the second quarter of the ongoing fiscal, which narrowed marginally as compared with ₹657 crore in the year ago period. Revenue from operations grew 30% year-on-year to ₹3,601.4 crore in Q2 FY25, from ₹2,763.33 crore in the corresponding period last year.

Swiggy last week introduced its invite-only premium membership, One BLCK at ₹299 for a three-month plan. Domestic brokerage JM Financial believes the idea behind launching an exclusive programme is to “better retain and foster loyalty amongst top quality customers (especially that cohort of customers who might be spending meaningfully more than the rest).” “Such programmes typically help drive incremental sales from exclusive members, thereby meaningfully increasing their life time value for the platform,” says JM Financial.

The company had 5.7mn Swiggy One members as of Q1 FY25. These customers get unlimited free deliveries on their food delivery as well as quick commerce (Instamart) orders, apart from exclusive discounts at select restaurants on food delivery and dining out orders. According to the company, around 80% of Swiggy One members use two or more services on Swiggy and spend 3x more than non-Swiggy One members.

Swiggy’s food delivery business turned profitable last year, driven by higher monetisation in advertising, reducing cost of delivery while maintaining delivery partner earnings and other variable costs by scaling technology-led interventions. “Profitability has also been enhanced by managing marketing and indirect costs, where absolute costs have reduced by 22% over the past two and a half years, while the GOV (gross order value) has grown by 41%. This has been the outcome of concerted efforts to simplify our tech-stack, cost-efficiencies in manpower and unlocking efficiencies in marketing spends by mining the benefits of our unified app,” says the company.

Swiggy, a pioneer in the food delivery and quick commerce industries in India, faced stiff competition from Zomato in food delivery and Blinkit plus Zepto in quick commerce in the past 3-4 years and hasn't been able to maintain its early mover advantage, according to HSBC. In the first half of 2025, Swiggy was 75% of Zomato in food delivery and 55% of Blinkit (owned by Zomato) in quick commerce in terms of gross order value (GOV). Profitability is also lagging in both businesses, says HSBC.

During the earnings announcement, Sriharsha Majety co-founder, managing director and Group CEO Swiggy, said the business has ramped up profitability significantly, with Adjusted EBITDA margins improving by nearly 1,000 bps over the past 2.5 years, to 1.6% in Q2FY25. “This has been the result of consistent growth in users and their spends, a leap in restaurant advertising, concerted efforts on efficiency in fixed costs, substantial improvement in on-ground execution, and cost-efficient interventions into improving the customer experience. It has come in spite of significant competitive action on subscription programmes ramping-up, which had dragged growth for us in the second half last fiscal,” said Majety.

On quick commerce platform Instamart, Majety said the company’s growing network of 609 dark stores has expanded to cover 44 cities as of September. “Over the past year, we have pivoted our network to larger and more optimised dark stores which now house nearly 3x the SKUs. We are increasing our store counts as well, and added 52 stores in Q2,” said Majety. The Swiggy co-founder and MD said the company plans to double its store count by March 2025, while increasing the average size of its stores by 30-35%.

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