Swiggy Limited

Swiggy's quick commerce business, Instamart, saw its contribution margin improve by 100 basis points this quarter. Despite this, the segment experienced sequential growth deceleration, with revenue growth being lower and absolute losses higher (INR 200 crores contribution loss, INR 800-900 crores adjusted EBITDA loss). Management attributed this to high competitive intensity and 'irrationality' in the market, stating a commitment to 'not throw good money at bad growth'. The company reiterated its target to achieve contribution margin zero for quick commerce by AMJ'26, driven by structural improvements and monetization opportunities with brands.

The Food Delivery segment demonstrated strong performance in Q3 FY26, with Gross Order Value (GOV) growing 20.5% year-over-year and Monthly Transacting Users (MTU) increasing by 22%. The contribution margin for Food Delivery improved by 30 basis points this quarter. Management expressed increased confidence in hovering near the upper end of their 18%-20% growth guidance, while maintaining the target of achieving 4.5%-5% gross order value contribution margin through a combination of contribution margin gains and operating leverage.

The company maintains a strong cash balance of almost $2 billion. Capital expenditure is primarily focused on darkstore infrastructure and warehousing capacity expansion, with warehousing capacity more than doubling over the last four quarters. Management indicated a continued focus on optimizing working capital, noting a net working capital addition of INR 130 crores over the last couple of quarters. The goal is to improve overall net working capital days, which is expected to be seen in subsequent quarters.

Swiggy acknowledges the intense and 'irrational' competitive environment in the quick commerce sector, which has impacted growth. The company's strategy is to prioritize 'good growth' and structural improvements over simply buying market share through heavy discounting. While not commenting on specific market share movements, management emphasized focusing on customer loyalty, assortment, and value proposition to drive sustainable leadership, rather than engaging in price wars that lead to non-sticky customers.

Operational efficiencies are being driven by better utilization of infrastructure, with overall utilization up about 5%. The company aims for a 25%-30% increase in throughput per store in the near term. Capacity expansion, particularly in warehousing, is focused on reducing middle-mile costs and enabling faster replenishment, especially in Tier 2 and Tier 3 towns. These investments are intended to structurally improve supply chain efficiencies and support long-term growth without necessarily adding a significantly higher number of new stores.