Swiggy’s Performance & Cash Balance Analysis
Swiggy’s food delivery gross order value showed a 10% growth quarter-on-quarter, reaching Rs 80.9 billion. This increase was driven by a rise in monthly transacting users, reaching 16.3 million. Despite stability in food delivery, Swiggy faces challenges in the quick commerce segment, where the gap with Blinkit is widening.
Analysis of Swiggy’s Cash Balance
Swiggy’s cash balance is currently low compared to the expected burn rate for the next four quarters. With cash reserves at Rs 53.5 billion and an estimated burn rate of around Rs 30-32 billion over the next year, the company faces a tight financial situation. Monetizing its stake in Rapido (approximately 12%) could provide some relief, but uncertainties remain.
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Investor Outlook: Upgrade or Downgrade?
The recent analysis suggests that Swiggy’s potential for quick commerce value has largely been realized, with limited room for further growth. As a result, the company has been downgraded to an Add rating from a Buy rating. The target price remains unchanged at Rs 400 per share.
On the business-to-consumer front, Swiggy saw a 45.2% year-on-year growth in gross order value in Q1. The food delivery sector witnessed an 18.8% year-on-year growth to Rs 80.9 billion. However, adjusted Ebitdam for food delivery declined slightly to 2.4% due to factors like increased delivery partner incentives.
Comparing Swiggy’s performance to Blinkit, Instamart continues to lag behind in the quick commerce segment. While quick commerce gross order value grew by 18.2% quarter-on-quarter, adjusted Ebitda losses widened to Rs 8.96 billion in Q1.
The net losses for Q1 stood at Rs 11.97 billion, reflecting the challenges faced by Swiggy in maintaining profitability in a competitive market.
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