Swiggy Limited

Instamart's Gross Order Value (GOV) growth accelerated to 108% YoY, primarily driven by dark-store expansion. The Average Order Value (AOV) saw a significant improvement, increasing 16% quarter-on-quarter and 26% Y-on-Y, surpassing previous guidance. The contribution margin for Instamart improved by 100 basis points quarter-on-quarter. Management reiterated its guidance to achieve contribution margin neutrality for Instamart between December and June quarter of calendar year 2026.

Swiggy currently operates in 127 cities with 4.3 million square feet of dark store area. The company believes it has sufficient network density and geographical presence. Future network expansion will be more measured, focusing on specific needs within existing geographies rather than expanding into new white spaces. The current infrastructure is projected to support 100% GOV growth without requiring significant additional store count.

The non-grocery business within Instamart has shown substantial growth, increasing its share from 6.6% in Q1 FY25 to 18.5% in Q1 FY26, with expectations for continued upward trajectory. Maxxsaver, a program designed to encourage higher basket sizes, helps in habit formation but results in a lower take rate for specific orders. While this creates a slight short-term headwind, management believes it will contribute to long-term contribution margin improvement through ecosystem investments.

The food delivery segment recorded an 18.8% GOV growth. Management noted a seasonal dip in Q1, which is a recurring pattern for this period. They expressed confidence that the business will correct back and maintained their medium-term guidance for a 5% EBITDA margin. The competitive intensity in food delivery remains high, but Swiggy is focused on its internal strategy and market expansion.

Swiggy reported a healthy cash balance of ₹5,500 crores, which management deems sufficient for its operations. Capital expenditure (capex) investments will be more graded going forward^⏳, with the majority of past capacity expansion focused on warehousing. Approximately 75% of the capex in the previous period was directed towards warehousing, and this work is largely complete.

Swiggy announced its intention to 'go separate ways' with Rapido due to a conflict of interest. The partnership, established 2.5 years ago, initially aimed for collaboration in food delivery, but this did not materialize. Rapido's decision to enter the business independently led to the re-evaluation of the investment, signaling a strategic divestment.