Swiggy , India's leading on-demand convenience platform, has reported growth across its key business segments in its latest quarterly results, while also facing scrutiny over a new fundraising initiative.

Board Approves Rs 10,000 Crore QIP

Swiggy's board has approved raising up to Rs 10,000 crore through a Qualified Institutional Placement (QIP), citing a competitive and dynamic environment. This move has drawn criticism from industry experts, including Devina Mehra, Founder & CMD of First Global.

Investor Criticism

Devina Mehra questioned the fundraising strategy of loss-making startups, highlighting that:

• Swiggy had raised Rs 4,500 crore in its IPO a year ago with an additional Rs 6,800 crore offer for sale.
• The company is making losses at the rate of Rs 1,100 crore per quarter.
• There appears to be no return on capital to dilute.

Mehra criticized the shift in public markets from rewarding profitability to facilitating exits for promoters and earlier investors. She also questioned which institutions would subscribe to the QIP and emphasized that traditional valuation methods remain the only reliable way to value companies.

Food Delivery Achieves Profitability

Swiggy's food delivery business, the company's primary revenue driver, has reached a significant milestone by turning profitable. The segment reported an annualized adjusted EBITDA of Rs 960.00 crore.

Strong User Growth and Order Value

The company witnessed growth in its user base and order values:

• Monthly Transacting Users (MTU) increased to 16.3 million, up from 14.7 million in the same quarter last year.
• Gross Order Value (GOV) reached Rs 8,542.00 crore, representing an 18.8% year-over-year growth.

Quick Commerce Expansion

Swiggy's quick commerce segment, Instamart, showed growth:

• GOV increased by 107.6% year-over-year to Rs 4,670.00 crore.
• The company expanded its dark store network to 1,102 stores across 128 cities.

However, the quick commerce segment remains in investment mode, with a negative 12.1% EBITDA margin.

Out-of-Home Consumption Segment Profitability

The out-of-home consumption segment, which includes Swiggy Dineout, maintained growth:

• 50% year-over-year GOV growth
• Profitable for three consecutive quarters

Platform Growth and Cross-Pollination

Swiggy's overall platform saw accelerating B2C GOV growth of 30%, driven by:

• Cross-pollination between services
• Increased user engagement across multiple offerings

Financial Highlights

Toastr App Controversy

Amid Swiggy's financial results and fundraising plans, a new app called Toastr, which claims to compare food prices between Swiggy and Zomato in real-time, has faced user complaints. Initially praised on social media, the app has come under scrutiny for several reasons:

• Users are required to provide login details for both Swiggy and Zomato.
• Inaccuracies in price comparisons have been reported, with one example showing a discrepancy between displayed and actual prices.
• Concerns have been raised about data scraping methods and whether comparisons include delivery charges and coupons.
• Some users noted that Zomato prices displayed on the app are not live and don't include current offers.

Market Analysis

Brokerage house Nuvama Institutional Equities has initiated coverage on Swiggy, stating that the company is recovering from earlier strategic missteps. According to their analysis, Swiggy's food delivery business has outpaced Zomato for four consecutive quarters, alongside improved profitability.

Future Outlook

With its food delivery business achieving profitability and the scaling of its quick commerce segment, Swiggy appears positioned for continued growth. The company's focus on expanding its user base and increasing engagement across multiple services may drive further growth.

As Swiggy continues to innovate and expand its offerings, investors will be watching closely to see how the company balances growth with profitability, particularly in its quick commerce segment. The controversy surrounding the Toastr app also highlights the competitive nature of the food delivery market and the increasing interest in price comparison tools among consumers.

The recent board approval for a significant QIP fundraise has sparked debate about the company's financial strategy and valuation methods in the startup ecosystem. As Swiggy moves forward with its growth plans, it will need to address these concerns and demonstrate sustainable profitability to maintain investor confidence.

Swiggy , India's leading food delivery and quick commerce platform, is gearing up for a significant capital infusion as its board prepares to consider raising ₹10,000 crore through a qualified institutional placement (QIP) or other modes. This move comes as the company reports strong growth in its quick commerce segment, despite widening losses in the recent quarter.

Financial Performance

Swiggy's financial results for the September quarter reveal a mixed picture:

The company's quick commerce segment, which includes its Instamart service, has shown remarkable growth, doubling its revenue year-over-year to ₹980.00 crore.

Quick Commerce Momentum

Swiggy's quick commerce business has been a key driver of growth:

• The segment reported over 100% year-on-year growth in Gross Order Value (GOV) for the third consecutive quarter.
• Non-grocery categories have expanded significantly, now accounting for 26% of quick commerce GOV, up from 9% a year ago.
• The company's store network has the capacity to double its current order volume, indicating strong potential for future growth.

Strategic Initiatives

Swiggy has implemented several strategies to boost its quick commerce business:

• Launched the 'Quick India Movement' sale event to showcase its expanded product range beyond groceries.
• Introduced a separate app for Instamart, which has been effective in acquiring new customers, especially in newer cities.
• Focused on improving store utilization and operational efficiency, with plans to densify its network in existing cities rather than expanding to new ones in the near term.

Fundraising Plans

The proposed ₹10,000 crore fundraise, if approved, would significantly strengthen Swiggy's balance sheet. The company intends to use these funds for:

• Supporting growth initiatives, particularly in the quick commerce segment
• Investing in innovation and potential new business opportunities
• Building strategic reserves to maintain competitiveness in a rapidly evolving market

Market Position

Despite the widening losses, Swiggy's shares closed at ₹405.75, remaining above the IPO price of ₹390.00. However, the stock is down 25% for the year, reflecting broader market sentiments and concerns about profitability in the food delivery and quick commerce sectors.

Looking Ahead

Swiggy aims to achieve contribution margin profitability in its quick commerce business by the June 2026 quarter. The company's management expressed confidence in the long-term potential of the quick commerce segment, projecting that it could eventually reach a 4% EBITDA margin with a 7% contribution margin.

As Swiggy continues to invest in growth and innovation, the proposed fundraise could play a crucial role in solidifying its market position and driving the company towards sustainable profitability in the competitive quick commerce landscape.