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News Topical, Digital Desk : Swiggy's shares have fallen 41% so far this year, and have been trading below its IPO listing price since February 6. The reason is weak earnings, strong competition and increasing losses in Quick Commerce. Net loss of Rs 1,081 crore in the January-March quarter, while the loss in the same period last year was Rs 799 crore. The loss was also higher than Bloomberg's estimate (Rs 778.1 crore).
Why the stock is under pressure- Zomato's Blinkit has increased competition regarding delivery time and growth. Swiggy's food delivery business remained stable, but huge losses in Quick Commerce are still a cause of concern. The stock is continuously down since the IPO and no recovery is visible.
According to a Bloomberg report, 14 out of 20 have recommended 'Buy'. 3 have said 'Hold', and 3 have said 'Sell'. According to Bloomberg, the 12-month target price is Rs 414.32. But the risk remains- Investors are worried due to delay in margin improvement and reducing cash burn. execution risk means there is no clarity on when and how the company will move towards profitability.
| Investor Profile | Advice |
|---|---|
| Long Term Investor | 'Hold' or 'Buy' on dips, but watch out for losses in Quick Commerce |
| short term trader | Avoid it for now, until the trend reverses |
| New Investors | Wait for the results of one or two quarters before investing now |
Swiggy has growth potential, but profitability is still far away. If you are a high-risk long-term investor, you can keep a 'buy on dips' strategy. But Quick Commerce needs to reduce losses and have clarity in the company's strategy.
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