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Swiggy
Our verdict on Swiggy isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Management demonstrated significant operating leverage as overheads in the quick commerce business grew only 5% sequentially compared to a 25% sequential growth in GOV. (2 met, 1 missed, 2 revised across 5 tracked commitments)
“And towards that, while we made 100 basis points improvement in the previous quarter, we actually expect to make an even higher contribution margin improvement in the current quarter.”
Commitment to integrating new Labour Code requirements into the operating model.
“Swiggy is strengthening its digital systems and internal processes to seamlessly integrate the new requirements into our operating model.”
Management targets high-teens growth in Food Delivery Gross Order Value (GOV) in the near-term. — target: High-teens growth
“We remain confident of our high-teens growth outlook in the near-term.”
Swiggy expects to convert into an IOCC (Indigenously Owned and Controlled Company) structure once domestic shareholding hits the majority mark. — target: >50% domestic shareholding (+2 more commitments)
“We are currently at around roughly 47% in terms of our overall domestic shareholder base. And when we hit the majority mark, which should as we had said in the past, it will be an eventuality, we do expect to convert into an IOCC structure.”
The company expects advertising revenue for Instamart to reach 6% to 7% of GMV in steady state. — target: 6% to 7% (+1 more commitment)
“In terms of our guidance, we believe that in steady state, this number can get to 6% to 7%.”
See the full cited Management analysis of Swiggy
How durable is the business?
Quick-commerce (Instamart) growth accelerated significantly with GOV up 107.6% YoY, driven by a 25.6% jump in Average Order Value (AOV) as the mix shifted toward non-grocery items. (2 expanding)
“GOV growth accelerated to 107.6% YoY (+21.1% QoQ) to INR 5,655 Cr... Average order value grew 25.6% YoY to INR 612.”
The share of non-grocery items in the total mix has surged from 6.6% to 18.5% YoY, significantly boosting the Average Order Value (AOV). (3 expanding)
“over the last year, if you look from Q1 FY ‘25 to Q1 FY ‘26, we have grown from 6.6% to 18.5% of the non-grocery business.”
The segment achieved a turnaround with positive Adjusted EBITDA margins of 0.7% and near-50% YoY growth. (1 expanding)
“The segment clocked yet another quarter of near-50% YoY growth, with Adjusted EBITDA margins improving to 0.7%”
Instamart's Gross Order Value (GOV) growth accelerated significantly to 108% YoY, driven by aggressive dark-store expansion and a sharp increase in Average Order Value (AOV). (3 expanding across 2 engines)
“Adjusted Revenue (INR crore) ... Q3FY26 1,052; GOV grew 103.2% YoY; Adjusted EBITDA margin improved by 65bps QoQ to -11.4%”
The segment has successfully turned around and is now profitable, contributing to the company's treasury balance. Management expects it to eventually deliver a steady-state 4% positive EBITDA. (5 expanding across 1 engine)
“Adjusted Revenue (INR crore) Q3FY26 111; Adjusted EBITDA margins improving to 0.7%”
See the full cited Business Model analysis of Swiggy
Where does growth come from?
Advertising revenue is identified as a key driver for margin improvement, offsetting lower commissions on non-grocery items. (1 new trend, 4 steady across 5 signals)
“Now the scale of the movement for all the items that we sell, there is a bigger opportunity of monetization with the brands that we explored... the monetization opportunity has moved up as and when our scale of revenue with the brands have increased.”
The company is seeing a healthy increase in its base of 'Retained Users'—customers who have formed a habit of using the platform—which is a key indicator of long-term stability. — Retained User (RU) Base: Healthy and increasing
“Our MTU in the Retained User (“RU”) base is actually quite healthy and increasing.”
Swiggy is expanding its reach into smaller Indian cities (Tier 2 and Tier 3 towns) by building out new warehouse infrastructure to get closer to these new customers.
“a lot of this warehousing capacity is also coming into Tier 2, Tier 3 towns where we expanded, putting in the infrastructure on warehousing helps us to reduce our middle mile, also helps us to replenish our stores faster and get closer to consumers.”
Swiggy is working toward making its quick commerce business (Instamart) break even at the 'contribution' level (profit before fixed costs) by the first quarter of the next financial year. — Quick Commerce Contribution Margin: null (+1 more signal)
“We believe that is the right path which we have always committed to, and we are essentially reiterating that commitment by saying that we'll be at contribution margin zero in the quarter of AMJ’26.”
The company is seeing improved efficiency in its existing dark stores (local delivery hubs), with a 5% increase in the number of orders handled per store recently. — Store Throughput/Utilization: 5% increase
“over the last couple of quarters, you may have seen that our utilization has gone up about 5%. So we do believe that there's significant headroom.”
See the full cited Future Growth analysis of Swiggy
What could break the thesis?
Management reports that while they added 2.8 million Monthly Transacting Users (MTU), these new cohorts have lower initial spend per customer, requiring ongoing 'trial' incentives. (1 stable, 2 easing, 1 intensifying)
“We believe that the irrationality of that growth is so high that it is leading to customers switching from one platform to the other without having any kind of loyalty.”
Management reports that even after promotional events like 'Quick India Movement' ended, they saw continued adoption and higher traffic, suggesting habit formation is occurring. (1 easing, 1 stable)
“Quick-commerce order-growth has remained in mid-to-high single digits... impacted as a result of Maxxsaver-led cannibalisation... and weaning away of low-AOV orders.”
Quick-commerce GOV growth accelerated to 107.6% YoY and 21.1% QoQ, suggesting the demand slowdown risk is easing as the platform gains scale. (1 easing, 2 resolved)
“I mean, obviously, your growth compared with, let's say, Blinkit is a lot lower. And at the same time, we see the other competitors discount heavily.”
The risk is easing significantly due to a massive capital infusion. While operational losses continue (INR -712 Cr Adjusted EBITDA), the balance sheet was fortified by a INR 10,000 Cr QIP and a INR 2,400 Cr stake sale in Rapido. (1 easing)
“Add: Share based payments 233”
The company's quick-commerce darkstore network is currently under-utilized, meaning they are paying for capacity that is not yet generating enough orders to be efficient. [EXECUTION] (+1 more risk)
“Our network is currently under-utilized and has sufficient capacity to serve over 2X the current GOV”
See the full cited Risk analysis of Swiggy
Swiggy analysis by filing period
Read the full thesis on Swiggy
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