Swiggy Q2 Loss Narrows to Rs 922 Crore, but Instamart's Rs 895 Crore Burn Keeps Pressure On

Swiggy reported a consolidated net loss of Rs 922 crore for the July-September quarter on Thursday, an improvement from the Rs 1,092 crore it lost in the same period last year. Revenue from operations climbed 36.1% to Rs 7,571 crore. The year-on-year picture looks better, but the quarter-on-quarter one does not: the loss widened by roughly 17% from Rs 791 crore in the June quarter as the company spent more to expand Instamart and to build Toing, its budget food app.

The results came after the market had closed. Swiggy's shares had already fallen more than 5% during Thursday's session to settle at Rs 211.30, which gives the company a market value of about Rs 58,325 crore.

Food delivery is now paying the bills

The core food delivery business had its best quarter so far. Gross order value rose 17.7% to Rs 10,054 crore, and adjusted Ebitda reached Rs 341 crore, up from Rs 240 crore a year earlier. That works out to a margin of 3.4% of order value. Monthly transacting users grew to 19.8 million.

Two things drove the margin. Advertising lifted Swiggy's take rate to a record 26.1%. Shorter-distance orders through its Bolt and 99-Store formats now make up more than a quarter of food volumes, and they cost less to deliver. Management said growth crossed 20% in September and kept its full-year guidance of 18-20% order value growth, not counting Toing.

Instamart is still where the money goes

Quick commerce is a different story. Instamart added 69 net dark stores in the quarter, the same number it added over the previous three quarters put together, and now runs 1,240 stores across 133 cities. Its gross order value grew 31.4% to Rs 9,230 crore, and orders rose to 130 million.

That expansion was expensive. Instamart's adjusted Ebitda loss rose to Rs 895 crore from Rs 778 crore in the June quarter. Contribution margin was minus 1% of order value, better than a year ago but 82 basis points worse than last quarter. Swiggy blamed targeted discounts to win back dormant users, a change in user mix, and new stores that are not yet busy enough to cover their costs.

The shareholder letter says adjusted Ebitda losses at Instamart "peaked" in the September quarter. The company expects the margin to improve by about 100 basis points in the December quarter. It also said break-even would take about 2.3 times today's scale, or roughly Rs 60,000 crore of annualised net order value. That is a long way off, and Swiggy itself warned that competition in quick commerce is unlikely to ease soon.

The Eternal comparison

The numbers look tougher when set against rival Eternal, which reported a day earlier. Eternal posted a Rs 125 crore profit, and its quick-commerce arm Blinkit made Rs 184 crore of adjusted Ebitda from more than twice as many stores as Instamart. Both companies are now profitable in food delivery. The gap between them is almost entirely in quick commerce.

What could narrow the gap

Swiggy has a few changes in progress that could help. Shareholders approved a 49.5% cap on foreign ownership so the company can qualify as Indian-owned and controlled, and domestic ownership has already risen above 58%. That status would let Instamart hold its own inventory instead of relying on third-party sellers. The company expects the shift to start in the middle of the December quarter, take two to three quarters, and add about 80 basis points to contribution margin.

Swiggy ended September with Rs 13,662 crore in cash after burning Rs 708 crore during the quarter. That leaves plenty of room to keep spending, but investors will want to see the promised margin improvement show up in the December numbers.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.