Swiggy shares slip as Q2 loss widens; Nomura retains 'Buy' with 37% upside potential

Shares of Swiggy Ltd declined 2.58 per cent in Friday's trade to touch a low of Rs 407.30 after the food delivery and quick commerce platform reported a wider consolidated net loss of Rs 1,092 crore for the September 2025 quarter. The loss had stood at Rs 626 crore in the corresponding period last year.

Despite the widening losses, global brokerage Nomura reiterated its 'Buy' rating on the stock and raised its target price to Rs 560 from Rs 550 earlier, implying a potential upside of 37.49 per cent from the day's low level. The brokerage noted that Swiggy's growth metrics remained broadly in line with expectations, supported by healthy momentum in both its food delivery (FD) and quick commerce (Instamart) segments.

According to Nomura, Swiggy's FD business posted 6 per cent quarter-on-quarter (QoQ) and 19 per cent year-on-year (YoY) growth in gross order value (GOV) for Q2 FY26, matching expectations and outpacing the 18 per cent YoY growth recorded by rival Zomato. Monthly transacting users (MTUs) rose 5.7 per cent QoQ to 17.2 million, while the take rate (including delivery charge as a share of GOV) increased 10 basis points QoQ to 25.8 per cent.

The contribution margin stood at 7.3 per cent, flat sequentially despite revenue growth, as lower subscription fees and minimum order values offset the gains. The adjusted EBITDA margin improved to 2.8 per cent, up 44 basis points QoQ. Nomura expects Swiggy to maintain its growth momentum in food delivery, projecting 19–20 per cent YoY GOV growth in FY26–FY27 with contribution margins around 7.5–7.7 per cent.

The brokerage highlighted a strong performance in Swiggy's Instamart (quick commerce) vertical, which reported GOV of Rs 7,000 crore in Q2, up 24 per cent QoQ and 108 per cent YoY, surpassing expectations. The growth was driven by an 8 per cent QoQ rise in MTUs and a 14 per cent increase in average order value.

Instamart's contribution margin improved by 200 basis points (bps) QoQ to -2.6 per cent, aided by higher advertising revenue, lower customer incentives and better capacity utilisation. The business added 40 new stores during the quarter. The net order value (NOV) to GOV ratio declined to 70 per cent, reflecting an increased share of non-grocery items, which rose to 26 per cent from 18.5 per cent in the previous quarter.

Nomura noted that Swiggy's "Quick India Movement" sale in September led to a temporary fall in NOV/GOV ratios and a 40 basis point drop in take rate to 14.8 per cent. The brokerage said Instamart aims to achieve contribution margin break-even by Q1 FY27, projecting GOV growth of 104 per cent in FY26 and 63 per cent in FY27.

Swiggy management also disclosed plans to raise Rs 10,000 crore, primarily to fund its quick commerce expansion, amid intensifying competition. The brokerage pointed out that Zepto recently raised $450 million, while Zomato's quick commerce arm, Eternal, holds about Rs 20,000 crore in cash reserves.

Nomura concluded that Swiggy's disciplined execution and improving visibility on profitability could act as key catalysts for the stock. However, it cautioned that aggressive competition in quick commerce and a macroeconomic slowdown could pose risks to growth and profitability targets.