Swiggy Q2 FY26: Losses Narrow But Profitability Remains Elusive

The quarter showcased Swiggy's classic growth-versus-profitability dilemma. Net sales surged to ₹5,561.00 crores, marking a robust 12.09% quarter-on-quarter increase and an impressive 54.43% year-on-year expansion. This topline momentum reflects the company's aggressive market share capture in both food delivery and quick commerce segments. However, the operating profit before depreciation, interest, and tax (excluding other income) remained deeply negative at ₹798.00 crores, though improving from ₹954.00 crores in Q1 FY26.

With a market capitalisation of ₹89,821.00 crores, Swiggy represents one of India's largest e-commerce ventures. Yet, the company continues to burn substantial cash in pursuit of market dominance, raising fundamental questions about unit economics and the timeline to sustainable profitability. The stock's current trading price of ₹327.40 reflects investor scepticism, particularly given the company's flat financial trend and below-average quality grade.

Financial Performance: Revenue Surge Masks Margin Pressures

Swiggy's Q2 FY26 financial performance presents a nuanced picture of aggressive growth accompanied by persistent operational challenges. Net sales reached ₹5,561.00 crores, representing the highest quarterly revenue in the company's history. The sequential growth of 12.09% from Q1 FY26's ₹4,961.00 crores demonstrates sustained momentum, whilst the 54.43% year-on-year expansion from Q2 FY25's ₹3,601.00 crores underscores the company's market penetration success.

The margin trajectory reveals incremental progress, albeit from deeply negative territory. Operating margin (excluding other income) improved to -14.35% in Q2 FY26 from -19.23% in Q1 FY26, representing a 488 basis point sequential improvement. This marks the best operating margin performance since Mar'24. Similarly, PAT margin compressed to -19.64% from -24.13%, demonstrating better cost management relative to revenue growth.

However, the absolute loss figures remain concerning. The consolidated net loss of ₹1,092.00 crores, whilst an improvement from the previous quarter's ₹1,197.00 crores, still represents substantial cash burn. More troubling is the 74.44% year-on-year deterioration in losses from ₹626.00 crores in Q2 FY25. This suggests that whilst sequential trends show improvement, the company's scale expansion has come at the cost of significantly higher absolute losses.

Employee costs remained relatively stable at ₹690.00 crores in Q2 FY26 compared to ₹686.00 crores in Q1 FY26, suggesting controlled headcount expansion despite rapid revenue growth. This represents a positive development, as employee cost as a percentage of sales declined to 12.41% from 13.83% in the previous quarter. Depreciation increased to ₹304.00 crores from ₹288.00 crores, reflecting continued capital investments in technology infrastructure and delivery fleet.

Operational Challenges: The Long Road to Profitability

Swiggy's operational metrics reveal the fundamental challenge facing India's e-commerce platforms: achieving unit-level profitability whilst maintaining competitive intensity. The company's operating profit before depreciation, interest, and tax (excluding other income) stood at negative ₹798.00 crores in Q2 FY26, representing a 16.35% sequential improvement from negative ₹954.00 crores in Q1 FY26. Whilst this directional progress is encouraging, the magnitude of operational losses remains substantial.

The company's balance sheet reflects its cash-intensive business model. As of March 2025, shareholder funds stood at ₹10,219.49 crores, significantly strengthened from ₹7,791.46 crores in March 2024, primarily due to the company's successful initial public offering. Notably, Swiggy maintains a net cash position with negligible long-term debt, providing financial flexibility to sustain current loss-making operations. Current assets of ₹9,105.55 crores as of March 2025 provide adequate liquidity to fund near-term cash burn.

The company's five-year sales growth of 35.70% demonstrates impressive topline momentum. However, EBIT growth of just 12.04% over the same period (from increasingly negative bases) reveals deteriorating operational leverage. The average EBIT to interest coverage ratio of -30.85 times reflects the company's inability to generate positive earnings before interest and taxes, though the minimal debt burden mitigates immediate solvency concerns.

Interest expenses remained modest at ₹48.00 crores in Q2 FY26, up from ₹41.00 crores in Q1 FY26, reflecting the company's prudent approach to leverage. With negligible debt and a net debt-to-equity ratio of -0.32 (indicating net cash), Swiggy maintains financial flexibility. However, this conservative capital structure also means the company must rely primarily on equity capital to fund losses, leading to ongoing shareholder dilution.

Industry Context: Winner-Takes-Most Dynamics

The Indian food delivery and quick commerce market operates on winner-takes-most economics, where scale advantages in delivery network density, restaurant partnerships, and brand recall create formidable competitive moats. Swiggy's 54.43% year-on-year revenue growth in Q2 FY26 reflects aggressive market share capture, yet this growth comes at the cost of sustained losses as the company battles established competitor Zomato and emerging quick commerce players.

The e-retail and e-commerce sector in India continues to witness intense competition, with players prioritising gross merchandise value (GMV) growth over near-term profitability. Swiggy's strategy mirrors this industry-wide approach, investing heavily in customer acquisition, delivery infrastructure, and restaurant partner incentives. The company's operating margin of -14.35% (excluding other income) in Q2 FY26, whilst improved sequentially, remains deeply negative and lags behind more mature global food delivery platforms that operate at positive margins.

The quick commerce segment, where Swiggy competes through its Instamart platform, represents a particularly capital-intensive battleground. This segment requires dense dark store networks, extensive inventory investments, and rapid delivery capabilities—all of which demand substantial upfront capital before achieving unit-level profitability. Swiggy's consolidated approach of operating both food delivery and quick commerce under one umbrella creates operational complexity but potentially offers cross-selling opportunities and shared delivery infrastructure benefits.

Peer Comparison: Valuation in Context

Swiggy's positioning within the e-retail and e-commerce peer group reveals both relative strengths and persistent challenges. The company's valuation metrics must be viewed through the lens of its growth-stage profile and ongoing path to profitability.

Swiggy's Price-to-Book ratio of 9.22x sits in the middle of its peer range, significantly lower than FSN E-Commerce's 48.77x and Meesho's 63.09x, but substantially higher than Info Edge's 1.69x and Brainbees Solutions' 2.95x. This valuation reflects investor recognition of Swiggy's strong market position and growth trajectory, balanced against concerns about the extended timeline to profitability.

The company's ROE of 0.0% places it amongst loss-making peers, including Meesho and Brainbees Solutions. In contrast, profitable peers like Info Edge (5.39% ROE) and FSN E-Commerce (3.89% ROE) demonstrate that positive returns are achievable in the e-commerce sector, though these companies operate in different segments with distinct unit economics. Swiggy's negative debt-to-equity ratio of -0.32 indicates a net cash position, providing superior financial flexibility compared to peers with positive leverage.

Valuation Analysis: Premium Pricing for Future Potential

Swiggy's current valuation of ₹327.40 per share, translating to a market capitalisation of ₹89,821.00 crores, reflects a complex risk-reward equation. The stock trades at 9.22 times book value, a significant premium that can only be justified by expectations of eventual strong profitability and market leadership consolidation.

The company's negative P/E ratio (loss-making status) and negative EV/EBITDA of -25.36x render traditional valuation metrics less meaningful. Instead, investors must focus on revenue multiples and the trajectory toward positive unit economics. Swiggy's EV/Sales ratio of 4.61x suggests the market values each rupee of revenue at approximately ₹4.61 in enterprise value terms—a premium that requires sustained margin improvement to justify.

The stock's 52-week range of ₹297.00 to ₹473.00 illustrates significant volatility, with the current price sitting 30.78% below the peak. This decline from the 52-week high reflects growing investor concerns about the extended path to profitability and intensifying competitive pressures. The stock trades just 10.24% above its 52-week low, suggesting limited downside cushion at current levels.

Swiggy's overall valuation grade of "RISKY" appropriately captures the speculative nature of the investment. The company's Mojo score of 29 out of 100, placing it in "STRONG SELL" territory, reflects weak current fundamentals despite strong growth metrics. This low score stems from persistent losses, negative returns on capital, and flat recent financial trends, though it may underweight the company's strategic positioning and long-term potential.

Shareholding Pattern: Institutional Confidence Building

Swiggy's shareholding structure reveals growing institutional interest since its public listing, though the absence of promoter holding creates a unique governance dynamic. The company operates with 0.00% promoter ownership across all reported quarters, reflecting its venture capital-backed origins and professional management structure.

The most striking trend is the substantial increase in institutional ownership. Foreign Institutional Investors (FIIs) have increased their stake from 4.90% in March 2025 to 12.68% by December 2025, with a notable sequential jump of 44 basis points from September to December 2025. This growing FII interest suggests international investors view Swiggy as a strategic play on India's digital consumption growth, despite current profitability challenges.

Mutual fund holdings have surged dramatically, rising from 5.51% in March 2025 to 18.85% by December 2025. The sequential increase of 696 basis points from September to December 2025 represents particularly strong buying by domestic institutional investors. This aggressive accumulation by mutual funds indicates growing confidence amongst professional Indian fund managers about Swiggy's long-term prospects. With 35 mutual funds holding positions, the stock has achieved meaningful institutional distribution.

Insurance company holdings increased to 3.76% in December 2025 from 2.47% in September 2025, adding 129 basis points sequentially. This steady accumulation by insurance companies, known for their longer investment horizons, provides additional validation of Swiggy's strategic positioning. Other Domestic Institutional Investors (DIIs) hold 1.86%, up 27 basis points from the previous quarter.

The non-institutional shareholding has declined from 85.76% in March 2025 to 62.85% by December 2025, reflecting the natural transition from retail-dominated to institutionally-backed ownership structure post-listing. The 896 basis point sequential decline from September to December 2025 in non-institutional holdings coincides with the institutional buying surge, suggesting sophisticated investors are accumulating shares from retail participants.

Stock Performance: Post-Listing Struggles Continue

Swiggy's stock performance since listing has been marked by significant volatility and persistent downward pressure. Trading at ₹327.40 as of January 29, 2026, the stock has delivered disappointing returns across most timeframes, reflecting investor concerns about the company's profitability trajectory and competitive positioning.

The stock's one-year return of -23.68% significantly underperforms the Sensex's +7.88% gain, resulting in negative alpha of -31.56 percentage points. This substantial underperformance reflects the market's reassessment of growth-stage technology companies, particularly those with extended timelines to profitability. Swiggy's -9.92% underperformance relative to its e-retail and e-commerce sector (-13.76% sector return) suggests company-specific concerns beyond broader sectoral headwinds.

Recent performance shows extreme volatility. The one-month return of -17.07% indicates sharp selling pressure, with the stock underperforming the Sensex by 14.56 percentage points. The three-month decline of -21.85% and six-month fall of -20.83% demonstrate sustained downward momentum. However, the one-week gain of +2.14% (outperforming Sensex by +1.83 percentage points) suggests potential stabilisation, though this must be viewed cautiously given the broader negative trend.

From a risk perspective, Swiggy exhibits high volatility with a beta of 1.08, classifying it as a high-beta stock that amplifies broader market movements. The stock's volatility of 42.08% over the past year substantially exceeds the Sensex's 11.23%, reflecting the uncertainty surrounding the company's business model and profitability outlook. The negative Sharpe ratio indicates investors are not being adequately compensated for the elevated risk, placing Swiggy in the "HIGH RISK LOW RETURN" category.

Technical Analysis: Sideways Consolidation After Sharp Decline

Swiggy's technical picture reflects a stock attempting to find support after a prolonged decline. The current trend classification of "SIDEWAYS" (since December 9, 2025, at ₹397.30) suggests the stock has entered a consolidation phase following its sharp post-listing correction. This sideways movement represents neither a bullish reversal nor continued bearish breakdown, leaving the near-term direction uncertain.

The stock trades below all major moving averages, a decidedly bearish configuration. Current price of ₹327.40 sits below the 5-day MA (₹321.49), 20-day MA (₹350.86), 50-day MA (₹378.96), 100-day MA (₹401.57), and 200-day MA (₹385.16). This alignment of moving averages in descending order creates multiple overhead resistance levels that the stock must overcome to establish a sustainable uptrend.

Key technical levels define the trading range. Immediate support rests at ₹297.00, the 52-week low, providing a critical floor just 9.28% below current levels. Immediate resistance appears at ₹350.86 (20-day MA area), requiring a 7.17% rally to test. Major resistance zones cluster at ₹385.16 (200-day MA) and ₹401.57 (100-day MA), whilst the 52-week high of ₹473.00 represents strong resistance far above current trading levels.

Technical indicators present a mixed picture. The weekly MACD shows bearish signals, whilst the weekly RSI provides no clear directional signal, consistent with the sideways trend classification. Bollinger Bands indicate mildly bearish conditions, suggesting the stock trades in the lower half of its recent range. Moving averages flash mildly bullish on a weekly basis, though this contradicts the price trading below all key MAs. The weekly KST (Know Sure Thing) indicator shows mildly bearish momentum, whilst monthly Dow Theory suggests no clear trend, reinforcing the consolidation narrative.

Delivery volumes provide insight into institutional accumulation patterns. Recent delivery volume of 69.67 lakh shares on January 28, 2026, representing 48.62% of total volume, shows elevated institutional participation. However, this represents a 321.87% spike versus the 5-day average, suggesting episodic rather than sustained institutional buying. The trailing one-month average delivery volume of 76.13 lakh shares (51.67% of total volume) indicates reasonably healthy delivery-based trading, though not conclusive evidence of strong accumulation.

Investment Thesis: Mojo Parameters Dashboard

Swiggy's investment profile, as assessed through the Mojo framework, reveals significant challenges across multiple parameters that collectively justify caution despite the company's strong market position and growth trajectory.

The valuation assessment of "RISKY" reflects the disconnect between current fundamentals and market pricing. With a Price-to-Book ratio of 9.22x and loss-making operations, Swiggy trades at a significant premium that requires substantial future profitability improvement to justify. The company's negative P/E ratio and negative EV/EBITDA render traditional value metrics inapplicable, forcing investors to rely on revenue multiples and faith in eventual margin expansion.

Quality grading of "BELOW AVERAGE" stems from weak capital efficiency metrics. The company's average ROCE of -54.08% and latest ROCE of -65.99% demonstrate poor returns on invested capital. Average ROE of 0.0% and latest ROE of -42.59% indicate ongoing capital destruction. However, positive quality factors include zero promoter pledging, healthy institutional holdings of 37.15%, and strong five-year sales growth of 35.70%, preventing a lower quality classification.

The financial trend classification of "FLAT" for Q2 FY26 captures the nuanced performance. Whilst net sales reached record highs and margins improved sequentially, absolute losses remained substantial and deteriorated year-on-year. This flat assessment reflects neither strong positive momentum nor concerning deterioration, leaving the directional trajectory uncertain.

Technical trend status of "SIDEWAYS" since December 9, 2025, suggests the stock has entered a consolidation phase after its post-listing decline. Trading below all major moving averages creates overhead resistance, whilst support at the 52-week low of ₹297.00 provides a nearby floor. The lack of clear directional bias in technical indicators aligns with the fundamental uncertainty.

Key Strengths & Risk Factors

Outlook: What to Watch

The Verdict: Speculative Growth Play with Significant Execution Risk

Swiggy Ltd. presents a classic growth-versus-profitability dilemma that defines India's new-age technology companies. The company's 54.43% year-on-year revenue growth and improving sequential margins demonstrate operational progress and market leadership. However, the 74.44% year-on-year deterioration in losses, negative return on equity of -42.59%, and persistent cash burn of over ₹2,000 crores annually create substantial risk for investors seeking near-term returns.

The stock's -23.68% one-year performance and classification in the "HIGH RISK LOW RETURN" category reflect market scepticism about the timeline to profitability. Trading at 9.22 times book value whilst generating negative returns on capital creates a valuation-risk mismatch that favours patience over immediate entry. The growing institutional ownership (37.15% total) provides some confidence, yet sophisticated investors have longer time horizons than most retail participants.

For investors seeking exposure to India's digital consumption growth, Swiggy offers a leveraged play on food delivery and quick commerce adoption. However, this thesis requires conviction that the company will achieve unit-level profitability within the next 18-24 months and that competitive intensity will moderate. The absence of near-term catalysts and technical weakness (trading below all moving averages) suggest limited urgency for fresh positions.