Swiggy shares fall 5.2% ahead of Q2; profitability in focus

Swiggy shares fell 5.2% to an intraday low of Rs 212 on the BSE on Thursday, October 22, ahead of its second-quarter FY27 earnings, Economic Times Markets reported. The decline came as investors weighed the company’s route to profitability, a recent brokerage upgrade and strong quarterly growth at rival Eternal.

Swiggy’s preceding quarter showed a narrower loss: its consolidated net loss stood at Rs 791 crore in Q1 FY27, against Rs 1,197 crore a year earlier, a reduction of nearly 34%. Thursday’s share-price figure is an intraday snapshot, not a closing price or a live quote.

Anand Rathi backs recovery, but sees a near-term growth trade-off

Anand Rathi upgraded Swiggy to Buy last week and set a target price of Rs 310. The brokerage’s case is that the company is moving away from expansion at the expense of profitability towards a business in which additional growth can improve earnings.

The brokerage pointed to Swiggy’s emphasis on contribution margins rather than aggressive expansion. Its assessment put quick-commerce contribution margin at breakeven in Q1 FY27, compared with a loss of about 5.6% in Q4 FY25.

That progress may face a near-term test. Anand Rathi expects Swiggy to try to narrow its growth gap with Blinkit over the next two quarters. It said this push could put pressure on quick-commerce contribution margins within the guided range of 0% to minus 1% and lead to larger EBITDA losses. Contribution-margin breakeven should therefore not be read as overall profitability.

Food delivery and cash reserves underpin the forecast

Food delivery remains Swiggy’s main profit-generating business in the brokerage’s assessment. The segment recorded an EBITDA margin of about 3.1% in Q1 FY27, while gross order value grew 17.4% year on year. Its cash generation also helps fund network expansion.

Anand Rathi expects food-delivery cash flows and treasury income, supported by a cash balance of about Rs 14,000 crore at Q1 FY27, to cover quick-commerce operating losses fully by FY28 or the first half of FY29. That is a brokerage forecast, not an achieved milestone.

The brokerage valued Swiggy at roughly 23 times estimated FY28 EBITDA at the market price used in its assessment. On that basis, it argued that investors were effectively getting exposure to quick commerce and dining-out without paying an additional valuation premium. This is its valuation interpretation, rather than a separately established value for those businesses.

Eternal’s results sharpen the competitive backdrop

Swiggy’s earnings follow Eternal’s Q2 FY27 announcement a day earlier. Eternal reported net profit of Rs 125 crore, up 92.3% from Rs 65 crore in the corresponding quarter last year. Revenue from operations rose 77.6% to Rs 24,138 crore from Rs 13,590 crore.

Zomato’s food-delivery net order value increased 21.5% year on year to Rs 11,445 crore. Blinkit’s net order value rose 79.3% to Rs 20,940 crore, with sequential growth of 22.2%. These net-order-value figures are distinct from the gross-order-value measure cited for Swiggy.

Jefferies retained a Buy rating on Eternal and raised its target price to Rs 430. It cited faster Blinkit store expansion, improving unit economics, food-delivery growth above 20% and greater confidence in District. It also lifted its adjusted EBITDA estimates for FY27–FY29 by 5–8%.

Nomura maintained its Buy rating on Eternal with a Rs 350 target. It expects Blinkit’s store additions to keep margins broadly stable in the near term, with greater scale supporting improvement later. The brokerage also anticipates increasing overlap between conventional e-commerce and quick commerce.

The ratings, targets and earnings projections are the respective brokerages’ views, not BharatVox investment recommendations.