Synopsis
Swiggy's operating revenue surged 45% to Rs 6,383 crore in Q4, with net loss narrowing to Rs 800 crore. The company is balancing growth and profitability in its quick commerce arm, Instamart, aiming for a Rs 1 lakh crore net order value business. Food delivery also showed strong momentum, with adjusted revenue up 27%.For the fourth quarter, Swiggy’s net loss narrowed 26% year on year to Rs 800 crore, while overall cash burn reduced to Rs 606 crore from Rs 903 crore in the October-December period. During the quarter, Swiggy also recorded Rs 2,399 crore in cash proceeds from the sale of its stake in bike-taxi startup Rapido.
The improvement in the bottomline of Instamart, Swiggy’s quick commerce business, came after the company pulled back on discounts and subsidies, which it had earlier flagged as unsustainable in the long term. However, this has also led to moderation in the unit’s growth, in line with the broader quick commerce industry.
Sequentially, Instamart’s gross order value (GOV) declined marginally to Rs 7,881 crore from Rs 7,938 crore in the December quarter.
Speaking during the analyst call, Swiggy founder and group CEO Sriharsha Majety said that while the company is not comfortable ceding market share in quick commerce, it is making trade-offs between growth and profitability as it works toward its medium-term goal of building Instamart into a Rs 1 lakh crore net order value business with a 4-5% Ebitda margin.
“If fighting for short-term relevance means spending in places that will hurt us later, I think that will compromise our long-term relevance. It’s a balancing act, but there’s no commitment to go out and lose market share. It’s important to build a more durable business. As we mentioned, more growth will come from executing on the clarity of positioning that we’ve been talking about. We don’t yet know how many players will be left on the other side of all this spending and overall category growth,” Majety said.
In a letter to shareholders, Majety said that as quick commerce remains crowded due to the large market opportunity, companies are likely to increasingly split between convenience-led and value-led models. He said Instamart is focused on the convenience segment, anchored on reliable delivery, wide assortment and strong SKU (stock-keeping unit) availability.
Majety added that Instamart aims to position itself as a platform for “everyday upgrades” through differentiated products and private-label brand Noice, which he said could improve customer stickiness and drive higher order frequency over the coming quarters.
Instamart rival Blinkit, owned by Eternal, had also earlier flagged a moderation in quick commerce growth. Eternal CEO and Blinkit founder Albinder Singh Dhindsa had said on April 28 that, after delivering a 104% compound annual growth rate (CAGR) between FY23 and FY26, the 10-minute delivery firm expects its net order value (NOV) to grow by more than 60% over the next three years.
On Friday, Swiggy’s stock closed 0.5% higher at Rs 280.80 on the BSE. The company announced its results after market hours.
Food delivery momentum continues
Swiggy reported a 27% growth in adjusted revenue from its food delivery business in the fourth quarter from a year earlier. The company posted adjusted revenue of Rs 2,075 crore and a GOV of Rs 9,005 crore in the March quarter. GOV grew 22.5% year on year, above the company’s guided range of 18-20%.
“We have continuously launched a series of innovative offerings across our food delivery business. Collectively, these speed and affordability propositions now account for approximately one-fourth of our total platform volumes,” the company said in its letter to shareholders.
The company’s contribution margin remained steady at 7.8%, while improving sequentially from 7.6% in the December quarter. Swiggy also improved adjusted Ebitda from its food delivery business to 3.3% in the fourth quarter, compared with 2.9% a year earlier.
“It’s been consistent execution on the same vectors. We continue to believe in the speed, affordability and convenience equation. What you’re seeing is a compounding effect of MTU (monthly transacting user) build-up quarter after quarter,” Rohit Kapoor told ET. He added that the food delivery business hit a 15-quarter high, crossing the Rs 1,000 crore Ebitda mark for the first time.
Swiggy also said it is “confident” of delivering sustainable medium-term growth of 18-20% year-on-year in food delivery GOV.
