Swiggy Limited

Swiggy reported robust growth in Q4 FY25, with its quick commerce (Instamart) segment achieving 20% GOV growth and 16% NOV growth. The company added an unprecedented^🌐 2.8 million MTUs in quick commerce during the quarter. The food delivery business also performed well, recording 17.6% GOV growth and operating at a run-rate EBITDA of ₹1,000 crores. However, the quarter saw an operating cash burn of ₹1,000 crores, leading to a decline of ₹1,500 crores in cash balances, which now stand at ₹6,700 crores.

Swiggy expanded its quick commerce network by adding 314 stores in Q4 FY25, incurring a capex of ₹425 crores. Management clarified that the per dark store expenditure does not exceed ₹80 lakhs and that the major capex cycle for warehousing and network deployment is largely complete, anticipating reduced capex going forward^⏳. The NOV/GOV gap in quick commerce widened from 85% to 76% over two quarters, with discounts contributing 250 bps to this impact, primarily due to expanding selection and new user incentives.

The quick commerce segment's contribution margin stood at -5.6% in Q4 FY25. Swiggy revised its guidance for Instamart's contribution margin breakeven from Q3 FY26 to Q1 FY27. This adjustment reflects the need for flexibility to invest in growth amidst increasing competitive intensity and the underutilization of its rapidly expanded network. Management expects contribution margin to improve quarter-on-quarter as network utilization increases and newer stores mature, typically taking 6-12 months to reach optimal operational levels.

The food delivery business, a key cash generator for Swiggy, is currently run-rating at ₹1,000 crores EBITDA. The company provided a year-on-year growth guidance of 18-22% for food delivery for FY26, though management noted that current trends are towards the lower end of this range due to macroeconomic volatility^🌐. Swiggy expects to achieve an additional 100-150 basis points expansion in operating leverage, contributing to its steady-state EBITDA guidance for the segment.

Swiggy's Bolt initiative, offering 10-minute deliveries, now accounts for 12% of overall order volumes and is driving higher conversion rates due to faster service. New offerings like Maxxsaver (for orders over ₹999) and Megapods are designed to cater to diverse consumer needs, with Maxxsaver maintaining similar economics due to higher AOVs and Megapods showing strong profitability in mature locations. The company's customer acquisition strategy focuses on trials and building habit, with incentives aimed at driving initial transactions and fostering long-term retention and frequency.

Management acknowledged the increasing competitive intensity in the quick commerce space, with existing and new players entering the market. They noted the difficulty in accurately estimating market share due to varying GOV definitions but expressed confidence in their growth strategy, focusing on MTU quality and AMV growth. For food delivery, while competition is present, the company believes its strong platform, stable teams, and continuous innovation will enable it to maintain its market position and drive growth.