India's Swiggy slips to record low on wider quick-commerce losses (updated)
UPDATE 1-India's Swiggy slips to record low on wider quick-commerce losses Adds details, context and analysts' comments
Oct 23 (Reuters) - Shares of Swiggy SWIG.NS fell to a record low on Friday after the Instamart operator posted wider losses in its quick-commerce business, keeping the focus on profitability in the competitive segment following rival Eternal's ETEA.NS results this week.
Swiggy's stock was down 6.20% at 198.30 rupees in early trade, set for its worst day on record, if the current momentum persists.
Eternal and Swiggy have been rapidly expanding their networks of small warehouses, known as dark stores, as the segment has emerged as a key growth driver for both companies even as spending on expansion and competition have put profitability in focus.
Instamart's adjusted core loss widened to 8.95 billion rupees in the second quarter from 8.49 billion rupees a year earlier.
Jefferies said Instamart's losses are a key concern for investors, adding that the current price does not fully reflect the value of Swiggy's food-delivery business and cash holdings.
The brokerage maintained its "buy" rating but reduced its target price to 330 rupees from 435 rupees.
Emkay said sustained double-digit sequential net order value growth in Instamart, along with improving customer retention, monetisation, and store utilisation could help assign a higher valuation for the stock.
"We see Swiggy as a strong FD (food delivery) franchise with operating leverage and QCom as an optionality," Emkay said.
The brokerage maintained its "buy" rating but cut its target price by 11% to 310 rupees.
(Reporting by Saikeerthi in Bengaluru; Editing by Sherry Jacob-Phillips)
((Saikeerthi@thomsonreuters.com; (+91) 8296756080))
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