Why Swiggy Share Price is Rising

Welcome to today's edition of stocks made easy.

Regular readers of this column turn to us for ideas and investment insights.

In case you missed it:

• 5 High Dividend Yield Penny Stocks to Watch Out in 2025
• Why Cochin Shipyard Share Price is Rising
• NTPC Green vs Adani Green
• Top 5 Multibagger Growth Stocks to Watch Out for in 2025

In today's edition, we'll look at Swiggy - the food delivery platform that listed on the stock markets with much fanfare and has never looked back since then.

Since listing day close of Rs 455, Swiggy share price has rallied around 10% and currently trades at Rs 500.

Last month, the food delivery platform raised money via its initial public offering (IPO), which it plans to use for a few key projects (expanding Instamart, marketing and brand promotion).

The message that Swiggy gave to retail investors was clear: it's looking to double down on grabbing more market share in the quick-commerce space.

So, let's look at why Swiggy share price is rising and what lies in store for the company in this competitive e-commerce space.

Why Swiggy Share is Rising

#1 Strong H1 Performance

On 2 December 2024, Swiggy shares ended over 6% higher.

The recent spike in its share price comes after the food tech and grocery delivery company reported a revenue of Rs 63 billion (bn) in the first half of financial year 2025. This is a growth of 40% compared to last year's Rs 45 bn.

Swiggy's EBITDA also improved from negative Rs 12 bn to negative Rs 7 bn.

Swiggy is expected to officially declare its results today, 3 December 2024, as per regulatory requirements.

Shares of the company will be in focus today and retail investors who have been allotted shares during the IPO will watch the management commentary like a hawk, especially the company's plans to expand in the quick delivery space.

Which brings us to the second reason why shares are rising...

#2 10-Minute Food Delivery Expansion

The foodtech major yesterday announced expansion of its 10-minute delivery service 'Bolt' to 400 cities across India.

In October 2024, Swiggy had rolled out Bolt to deliver quick-to-prepare dishes in select cities including Delhi NCR, Bengaluru, Chennai, Hyderabad, Mumbai and Pune, in under 10 minutes.

According to the company, Bolt will now be expanded into Jaipur, Lucknow, Ahmedabad, Indore, Coimbatore and Kochi, besides Tier II and III cities such as Roorkie, Guntur, Warangal, Patna, Jagtial, Solan, Nashik and Shillong among others.

Swiggy's Bolt offering is aimed at reducing waiting times for frequently ordered items like coffee, icecream, burgers and biryani.

Recently, it was also reported that Swiggy is planning for a new launch of a high-priced prestige membership, that gives access to high-end experiences and events that are not available to the general public.

What Next?

This is what we wrote back in 2019 when the rise of the start-up culture in India was just getting started...

• The biggest change we can see in recent years is the rise of the start-up culture in India. Many homegrown companies - from Swiggy to Ola to Flipkart and countless others - have been commanding eye-popping valuations and have investors from all over the world falling head over heels for them.
  
  Many seem to double, triple or jump even more in value in a matter of a year or two, sometimes even in months.
  
  Growth companies, both on the stock market and off, are all the rage these days. There's no dearth of glamorous growth stocks listed on the exchange either.
  
  So why aren't we falling for them?
  
  Well, Benjamin Graham - from whose strategies our service draws inspiration - had a problem with investing in such companies. He had a distaste for investing in startups, new-concept companies, and high-growth companies.
  
  His biggest sore point was that paying large multiples to earnings or revenues based on one's own future growth projections could lead to big losses.

Unlike Zomato, its biggest rival, which has started to turn-around its business in recent quarters, Swiggy is drowning in losses.

While both companies have struggled at the net profit level, Swiggy's losses have narrowed.

Zomato, on the other hand, saw a significant improvement, moving from a loss of Rs 12.2 bn in FY22 to a positive Rs 3.51 bn in FY24, a dramatic recovery.

Financial Snapshot

Rs m, consolidated	FY20	FY21	FY22	FY23	FY24
Net Sales	34,681	25,469	57,049	82,646	112,474
Growth (%)	207%	-27%	124%	45%	36%
Operating Profit	-35,652	-11,673	-32,362	-38,260	-18,210
OPM (%)	-103%	-46%	-57%	-46%	-16%
Net Profit	-39,204	-16,169	-36,289	-41,793	-23,502
Net Margin (%)	-113%	-63%	-64%	-51%	-21%
ROE (%)	-95.7	-84.8	0.0	0.0	0.0
ROCE (%)	-87.1	-62.9	-50.8	-38.7	-26.7
Dividend (Rs)	0.0	0.0	0.0	0.0	0.0
Debt to Equity (x)	0.0	0.1	0.0	0.0	0.0

Source: Equitymaster

Zomato and Swiggy are two of India's biggest food-tech players, each with a distinct approach. Zomato, originally a restaurant discovery platform, has evolved into a dominant force in food delivery, cloud kitchens, and subscriptions like Zomato Pro.

Its focus on high-margin services, such as restaurant advertising and cloud kitchens, has fuelled consistent revenue growth and improved profitability, despite competition.

Swiggy, while aggressive in diversifying into quick commerce with services like Instamart (grocery) and Genie (local errands), faces a heavier investment load.

While its revenue growth is notable, Swiggy's broader service offering has yet to yield profitability at the same scale as Zomato.

There's also the concern about government intervention. While nothing has happened in India yet, global trends suggest that it's bound to happen sooner or later. In June 2021, San Francisco approved a resolution that would permanently cap delivery fees charged to restaurants at 15%.

Similarly, in August 2021, the New York City Council passed a permanent commission fee cap on third-party deliveries. Delivery fees were capped at 15% per order and all other fees were capped at 5% per order except for transaction fees.

Dozens of other cities including Los Angeles, Seattle, and Vancouver had created temporary caps to assist restaurants during the pandemic. They considering making the same permanent.

Restaurants in these cities praised these caps as they have long complained about high commissions which cut into revenues.

Most restaurateurs around the world believe food aggregators are predatory. They say the decision to adopt permanent caps is a critically important step toward protecting eateries.

With many countries following suit across the globe, it may not be long before we see this in India. The Indian government might impose its own cap on the maximum fee that can be charged for delivery by aggregators like Zomato and Swiggy.

Nevertheless, with a diverse revenue stream, extremely big user base, and a good presence in quick commerce space, Swiggy does have strong growth plans in place.

With Zomato currently leading in both key segments - food delivery and quick commerce - it will be interesting to see what measures and approach Swiggy will pursue to capture market share.

How Swiggy Share Price has Performed Recently

In the past 5 days, Swiggy share price has rallied 12%.

Swiggy touched its 52-week high of Rs 517 on 28 November 2024 and its 52-week low of Rs 390 on 13 November 2024.

Here's how it has performed since listing -

Here's a table comparing Swiggy with its peers -

Comparative Analysis

Company	Swiggy	Zomato	Brainbees	FSN Ecom	IndiaMart
ROE (%)	0.0	1.9	-11.7	3.4	17.9
ROCE (%)	-26.7	1.8	-5.7	8.1	24.4
Latest EPS (Rs)	-10.5	0.8	-5.3	0.2	71.8
TTM PE (x)	0.0	349.2	0	0.0	32.9
TTM Price to book (x)	49.2	8.7	6.5	37.5	7.6
Dividend yield (%)	0.0	0.0	0.0	0.0	0.9
Industry PE	0.0
Industry PB	11.6

Source: Equitymaster, Ace Equity

For more information, check out Swiggy's detailed financial factsheet.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...