By Manvi Pant and Praveen Paramasivam
(Reuters) – Shares of Swiggy plunged about 8% to a record low on Thursday, after the Indian delivery firm’s quarterly loss worsened as an expansion of its quick commerce stores to counter rivals such as Blinkit and Zepto hit margins.
The shares, which had their trading debut in November, fell as much as 7.9% and were on course for a seventh straight week of decline. Last down 5.3% at 395.2 rupees, the shares have fallen 6% below their debut price.
India’s benchmark index was down 0.3% on the day.
At least six brokerages lowered their price targets on the Swiggy shares after Swiggy said on Wednesday its consolidated loss widened 39% to 7.99 billion rupees ($91 million) in the December quarter.
The mean price target of 14 analysts on the stock has fallen to 552.21 rupees from 578.85 rupees on February 5, data compiled by LSEG showed.
Top quick commerce apps are rapidly expanding to chase growth at a time when the food delivery business is showing signs of slowing.
Swiggy and its peer Zomato have intensified their focus on quick commerce, which aims to deliver a variety of goods in 10 minutes, by opening more warehouses and expanding existing ones.
Swiggy’s Instamart quick-delivery platform contributed less to earnings as it poured money into expanding so-called dark stores, offered bigger discounts and hired more personnel during the seasonally-strong quarter.
“Balancing profitability with expansion is even more relevant for Instamart,” Elara Capital analyst Karan Taurani said on Thursday.
Instamart’s contribution margin – a measure of profitability – worsened by 270 basis points from the previous three months, while the margin for Zomato-owned rival Blinkit worsened by about 80 basis points.
Instamart opened 96 new warehouses in the December quarter, nearly double than the previous quarter.
The opening of 86 stores in January could pressure margins in the current quarter, analysts said.
($1 = 87.5325 Indian rupees)
(Reporting by Manvi Pant in Bengaluru and Praveen Paramasivam in Chennai; Editing by Varun H K)
