Mumbai, March 12 Food delivery platform Swiggy continues to face profitability challenges despite its strong market presence, according to a Jefferies report on Wednesday.
The brokerage firm has initiated coverage on Swiggy Limited with a ‘Hold’ rating and a target price of Rs 400, citing concerns over the company’s financial performance.
Swiggy holds a 45 per cent share in India’s online food delivery market, competing closely with Zomato.
The company’s food delivery business is expected to grow in the high-teens over the medium term, with an increase in margins.
Jefferies projects Swiggy’s gross merchandise value (GMV) to reach $3.4 billion by the financial year 2025, with 72 per cent compound annual growth rate (CAGR) in EBITDA between FY25 and FY27.
However, despite these growth expectations, “Swiggy’s path to profitability remains uncertain”, it added.
One of the key concerns highlighted in the report is the financial performance of Swiggy’s quick commerce segment, Instamart.
The business has shown rapid expansion, reaching a GMV of $2 billion, “but continues to operate at a loss”.
The Jefferies note expects these losses to persist through FY26, with improvements anticipated only by FY27.
The segment also faces intense competition from Zomato’s Blinkit, Zepto, and major e-commerce players like Flipkart and Amazon, adding further pressure on Swiggy’s margins.
Apart from food delivery and quick commerce, Swiggy also operates in online dining and supply chain services, but these businesses remain relatively small.
The company is expected to report negative EBITDA and free cash flow through FY27, raising concerns about its long-term financial stability.
While Swiggy remains net cash positive in the medium term, Jefferies believes competition in quick commerce could impact its profitability further.
Despite its dominant position in the hyperlocal market, Swiggy’s financial struggles continue to be a key concern for investors.
The note suggested that while the company has growth potential, profitability remains a major challenge amid rising competition and operational costs.
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