Swiggy shares slide over 5% ahead of Q2 results. What are analysts saying?

ETMarkets.com

In Q1, Swiggy reported a consolidated net loss of Rs 791 crore for the first quarter of FY27, marking nearly a 34% year-on-year decrease from the Rs 1,197 crore net loss reported in the year-ago period.

What are analysts saying?

Last week, Anand Rathi upgraded the stock to Buy and assigned a target price of Rs 310 per share. It said Swiggy is moving beyond a phase in which growth came at the cost of profitability. Over the past four quarters, the company prioritised contribution margin (CM) over aggressive growth, improving it from a peak loss of around 5.6% in Q4FY25 to breakeven in Q1FY27. The focus is now shifting to a phase where growth itself becomes a driver of profitability, analysts said.

The domestic brokerage expects Swiggy to focus on narrowing its growth gap with Blinkit over the next two quarters. This could push quick commerce contribution margins towards the higher end of the guided range of 0% to -1%, resulting in larger EBITDA losses.

While quick commerce has stabilised, the core food delivery business remains the company's primary profit generator, with an EBITDA margin of around 3.1% in Q1FY27 alongside 17.4% year-on-year growth in gross order value (GOV). The segment also generates steady cash flows to support network expansion.

The brokerage expects cash flows from food delivery and treasury income, backed by a cash balance of around Rs 14,000 crore as of Q1FY27, to fully cover quick commerce's operating losses by FY28 or the first half of FY29. At the current market price, Swiggy trades at around 23 times its estimated FY28 EBITDA, which Anand Rathi believes offers investors exposure to quick commerce (QC) and the dining-out (DO) business at no additional cost.

Eternal Q2 results

The results will come just a day after its rival Eternal declared its second-quarter earnings. It reported a 92.3% year-on-year (YoY) jump in net profit to Rs 125 crore in the second quarter of FY27 (Q2FY27), compared with Rs 65 crore in the corresponding quarter of the previous fiscal year.

The company's revenue from operations rose 77.6% YoY to Rs 24,138 crore in the quarter under review, from Rs 13,590 crore reported in Q2FY26.

From the segment-wise performance, Food delivery (Zomato)'s net order value (NOV) grew 21.5% year-on-year (YoY) to Rs 11,445 crore, while quick commerce (Blinkit)'s NOV surged 79.3% YoY to Rs 20,940 crore, with quarter-on-quarter (QoQ) growth of 22.2%.

Jefferies, with a Buy rating, has raised the target price to Rs 430 (34% upside). The brokerage said Eternal is accelerating its growth plans, supported by faster store expansion at Blinkit alongside improving unit economics, food delivery growth of over 20% and growing confidence in District. The brokerage has raised its adjusted EBITDA estimates for FY27-FY29 by 5-8% and increased its target price to Rs 430.

Nomura has retained its Buy rating on Eternal with a target price of Rs 350, implying an upside of 12%. For Blinkit, the brokerage expects store additions to keep margins stable in the near term, with scale driving margin improvement over the longer term. It also expects greater overlap between traditional e-commerce and quick commerce going forward.