Swiggy was upgraded to 'buy' by HDFC Securities despite the larger losses; Target cut off slightly to £ 400 | Einsmark news

Domestic brokerage firm HDFC Securities has upgraded Swiggy to a ‘buy’ of its earlier ‘reduced’ rating, even if the food delivery and a rapid trading platform reported a sharp increase in losses for the quarter of 2025 in March 2025. While the broker cut his target price slightly to £ 400 from £ earlier, the revised estimate still implies an upward potential of almost 28 percent from Friday’s closing price. Swiggy reported a consolidated loss of £ 1,081.18 crore in Q4FY25, which almost doubled from £ 554.77 crore reported in the same quarter last year. Despite the losses, revenue from operations increased by 44.8 percent year -on -year to £ 4,410, compared to £ 3,045.55 crore in Q4FY24. Brokers see long -term value despite challenges that HDFC Securities believe that SWIGGY’s fast trading losses can gradually relax as the company optimizes its operations, improves rates and increases average order values. Management expects a contribution to contribution in Quick Commerce (QC) within the next three to five quarters. The broker acknowledged that the segment of Swiggy’s food delivery (FD) remains stable, but its execution gap in rapid trade compared to the competitor who has expanded bright. However, it has pointed out that the share has corrected nearly 50 percent over the past five months, creating a more attractive valuation opportunity. “At the current market price, we effectively appreciate the Instamart business at only £ 7,500 crore (less than $ 1 billion), and offers a compelling value with a two-year cash fire,” HDFC Securities said. Despite maintaining its FY27 pre-end as Ebitda loss estimates at £ 1,800 crore, the broker swiggy upgraded to a ‘buy’ with a sum-of-the-party-based target price of £ 400 per share, which implies a 3.5x FY27 EV/Sales. Quick trade exceeds better, but according to HDFC Securities, Swiggy’s food delivery business has produced results that were largely in line with estimates, with monthly users (MTUs) at 15.1m, the gross income rising 19.7 percent to £ 1,867, and eBitDa adjusted to £ 212 crore. However, the broker emphasized that the rapid trade segment exceeded the user’s supplements, but still faced heavy losses. The acquisition of customers in Quick Commerce had a strong uptick, with MTUs with 2.8 million compared to the estimate of HDFC Securities of 1.1 million. Instamart’s gross order value (GOV) grew a quarter-to-quarter and 101 percent year-on-year to £ 4.670 crore, driven by 40 percent QOQ MTU growth to 9.8 million. However, the average order value (NOV) dropped 1.3 percent to £ 527. Despite the higher customer base, the QC burn in Q4FY25 remained at a £ 840 crore, higher than £ 580 in the previous quarter. The successive increase in losses is attributed to increased incentives of clients, aggressive expansion of dark stores – 316 new stores were added alone in the fourth quarter – and resulted in an underutilized network capability. Customized revenue in QC increased by 21.7 percent QOQ, supported by improved rates, which rose by 27 basis points to 15.7 percent. However, the contribution contracted to -5.6 percent and the adjusted EBIT Dam dropped to -18 percent of the GOV due to tightened marketing spending. Share price trend despite a sharp rise in quarterly losses, Swiggy’s share rose 3 percent on Monday, May 12, in the inner-day trading to touch £ 325. The script has risen 1.5 percent so far in May and has reversed its downward trend after four consecutive months of losses. It dropped by 4 percent in April, 1.3 percent in March, 19.5 percent in February, and 2 percent in January. In general, Swiggy’s Q4FY25 results reflect the pressure of the tightening in the hyper-competitive fast trading space, but HDFC Securities see potential in the company’s long-term growth strategy. With strong growth in the top line, improving rates and a sharp correction in valuation, the broker believes that the disadvantage is limited and that the share has been placed for a setback as the operating efficiency kicks in over the upcoming quarters. Disclaimer: The views and recommendations above are those of individual analysts or brokerage companies, and not of currency. We advise investors to check with certified experts before making investment decisions.