Buy Swiggy, target price Rs 740: ICICI Securities

ICICI Securities has buy call on Swiggy Ltd. with a target price of Rs 740.0. The current market price of Swiggy Ltd. is Rs 383.8 .

Financials

Revenue in Q3FY25 was INR 36.0bn (up 10.9% QoQ/31.0% YoY), in line with I-Sec estimates. EBITDA loss was Rs 7.3 billion (from Rs 5.5 billion in Q2FY25).EBITDA margin was -18.2% (down 279bps QoQ/94bps YoY). Net loss was Rs 8.0 billion. Consolidated adj. revenue in Q3FY25 was Rs 42.6 billion (up 10.1% QoQ/29.3% YoY). Adj. EBITDA loss was Rs 4.9 billion and adj. EBITDA margin (as a percentage of adj. revenue) was -11.5%. Cash balance as of Dec?24 was Rs81.8 billion.


Food delivery: In Q3FY25, food delivery GOV, at Rs 74.4 billion, grew 3.4% QoQ/19.2% YoY. Adj. revenue (food delivery) was Rs 18.6 billion, up 2.9% QoQ/21.3% YoY. Food delivery contribution margin (as a % of GOV) was 7.4% (up 80 bps QoQ) Adjusted EBITDA was Rs 1.8 billion, at 2.5% margin (+87 bps QoQ).

Quick commerce: Quick commerce?s GOV grew 15.5% QoQ/88.1% YoY to Rs 39.1 billion. Quick commerce?s adj. revenue was INR 6.0bn, up 17.5% QoQ/105.8% YoY.

Contribution margin was -4.6% (down from -1.9% in Q2FY25). Adj. EBITDA margin (as a % of GOV) was -14.8% in Q3FY25 (vs -10.6% in Q2FY25), impacted by lower CM, increased marketing expenses and manpower costs.

Investment Rationale
ICICI Securities maintains a BUY rating on Swiggy with three-stage DCF-based target price of Rs 740. Risks include a slowdown in discretionary spending and negative externalities disrupting business operations.