Swiggy gains 15% in three sessions ahead of Q1 results. What's driving the rally?

Swiggy shares rallied for a third consecutive session on Wednesday, taking their gains over the past three trading days to nearly 15%, as investors turned optimistic ahead of the company's June-quarter (Q1 FY27) earnings due on Thursday.

The stock ended 7.6% higher at ₹288.95 after touching an intraday high of ₹289.97. The rally comes after reports that quick-commerce rival Zepto has lowered its internal valuation expectations ahead of its proposed IPO, raising hopes of a more disciplined competitive environment. Sentiment was also aided by the appointment of Nandita Sinha as the new Chief Executive Officer of Instamart earlier this week.

While the recent surge has been driven by multiple factors, brokerages continue to see Swiggy's long-term investment case hinging on its ability to improve profitability in quick commerce without sacrificing growth.

Brokerages see mixed quarter, execution in focus

Kotak Securities expects Swiggy to report a mixed June quarter, with food delivery continuing to provide stability while Instamart faces competitive headwinds. The brokerage expects 20% year-on-year growth in food delivery gross order value (GOV), alongside slower-than-earlier 49% and 41% growth in Instamart GOV and net order value (NOV), respectively. It also expects food delivery contribution margins to contract sequentially due to the early monsoon and higher delivery costs.

"We expect Swiggy to report mixed revenue performance in Q1FY27," Kotak said, adding that Instamart is expected to report contribution margin breakeven, although "high fixed costs will still result in an adjusted EBITDA loss of ₹730 crore."

Competition remains the key overhang

Motilal Oswal, meanwhile, believes the competitive intensity in quick commerce remains the biggest near-term risk for Swiggy, even as it maintains a positive long-term stance on the stock.

"Competitive intensity [is] a key overhang," the brokerage said, noting that the industry continues to witness "aggressive discounting and incentive-led irrational competition." It added that Swiggy has consciously stayed away from heavily discounted, low-average-order-value transactions, a strategy that has moderated order growth but could support healthier unit economics over time.

The brokerage also expects food delivery to remain a stabilising business. "Food delivery as a stabilizing business in the overall portfolio, with no material structural concerns at this stage," it said, while adding that improving average order values, better store utilisation and operating leverage should support gradual margin improvement.

Street remains broadly constructive

The broader analyst community also continues to favour the stock. A Trendlyne report dated July 29, which aggregates recommendations from 27 analysts, shows a consensus "Buy" recommendation, with 15 analysts maintaining a Strong Buy rating, five recommending Buy, four suggesting Hold, one recommending Sell and two assigning a Strong Sell rating.

Investors will now turn their attention to Thursday's earnings for updates on food delivery demand, Instamart's growth trajectory, margin performance and management's commentary on competition. With the stock already up 15% in three sessions, analysts say the outlook and commentary on quick-commerce profitability could prove more important than the headline numbers themselves.

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