Swiggy shares tumble over 7%, hit 52-week low; three developments you need to know

Q4 losses increase

The food delivery and quick commerce platform on Friday, May 9, reported a widening of its consolidated net loss during the March quarter to ₹1,081.18 crore due to significant investments in quick commerce.

The company had reported a net loss of ₹554.77 crore on a consolidated basis in the year-ago period.

Swiggy's revenue from operations rose to ₹4,410 crore, as against ₹3,045.5 crore registered a year earlier, a regulatory filing showed.

However, its total expenses shot up to ₹5,609.6 crore during the quarter under review, as against ₹3,668 crore in the corresponding period of the previous year.

Adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) grew 15.4% quarter-on-quarter and over five times year-on-year to ₹212 crore, and strong efficiency and execution drove a margin expansion to 2.9% of GOV, up from 0.5% a year ago.

Investors pour in money in competitor

According to experts, another reason why investor sentiment took a hit was the fact that Motilal Oswal Financial Services co-founders Motilal Oswal and Raamdeo Agrawal have purchased Zepto shares worth $50 million (about ₹424 crore) each in a secondary transaction, while an additional $250 million round is in the pipeline, according to a report by PTI.

The shares have been acquired from foreign investors, the report added.

The $100 million deal was executed from their proprietary books and marks a significant step in Zepto's ongoing push to increase Indian ownership ahead of its planned IPO.

Currently, Indian ownership in Zepto stands at just over 42%, with other transactions in the pipeline expected to further boost this figure. The company has set an internal target of crossing the 50% domestic shareholding threshold before its IPO.

Zepto is a direct competitor to Swiggy's quick commerce business, Instamart, in the Indian market. Both companies offer super-fast grocery and essential deliveries, and Zepto has even surpassed Swiggy Instamart in terms of daily orders.

Shareholder lock-in period expires

"The number of shares that become eligible to trade amounts to 85% of the company's total outstanding equity. Based on the current market price, the number of shares that become eligible to trade is worth $738 million," the report added.

Generally, the market experiences a decline in the stock price once the lock-in period for the IPO is over. It is because investors sell their shares to capitalise on gains. This oversupply of shares can lower their value.