Swiggy Fee Hike Boosts Stock, But Losses Mount

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AuthorKavya Nair|Published at:
Swiggy Fee Hike Boosts Stock, But Losses Mount
Overview

Swiggy's stock surged following a platform fee hike to ₹17.58, mirroring rival Zomato. However, this move masks widening losses, particularly in its quick commerce segment (Instamart), and a stock price still significantly below its IPO valuation. Despite revenue growth, the company faces steep operational costs and a competitive market, prompting questions about the sustainability of this pricing strategy and its path to profitability. Zomato, conversely, shows a profitable food delivery business and its quick commerce arm reaching EBITDA breakeven.

Fee Hike Boosts Swiggy Stock

Swiggy's shares rose over 4% after news of an increased platform fee to ₹17.58 per order, including GST. This move mirrors rival Zomato's recent price adjustments, which raised its fee to ₹14.90 pre-GST, resulting in a similar final charge for consumers after tax. The market reacted positively, with Swiggy's stock trading at ₹275.75 on March 24, 2026, and a traded volume of 10.3 million shares that day. This immediate market reaction suggests investors were optimistic about higher revenues, a critical development given the company's ongoing profit struggles.

Growing Losses Mask Fee Hike Gains

Despite a revenue surge of 54% year-on-year to ₹6,148 crore in Q3 FY26, Swiggy's financial performance remains a major concern. The company reported a consolidated net loss that widened to ₹1,065 crore for the quarter ending December 2025. The quick commerce segment, Instamart, continues to be a significant cost, with its Gross Order Value (GOV) surging 103% year-on-year to ₹7,938 crore. However, the costs to expand this fast-growing but expensive segment are high. In contrast, competitor Zomato reported a consolidated net profit of ₹102 crore in Q3 FY26, and its food delivery business achieved an adjusted EBITDA margin of 5.4%. Furthermore, Zomato's quick commerce arm, Blinkit, reached EBITDA breakeven in the same quarter, a milestone Swiggy's Instamart has not yet reached.

Stock Price Trails IPO, Competition Heats Up

Swiggy, which listed on the stock exchange in November 2024 at an IPO price of ₹390, is trading well below its IPO price. As of March 24, 2026, the stock was trading at ₹275.75, a large drop from its IPO price and even below its 52-week high of ₹474. The company's negative trailing P/E ratio (TTM) was around -16.96 as of March 23, 2026, showing it's losing money relative to its market value of approximately ₹80,835 crore. India's food delivery market is highly competitive, valued at over $45 billion in 2024, with Swiggy and Zomato leading. While Zomato holds a larger market share in food delivery (58% vs. Swiggy's 38%), Swiggy Instamart trails Zomato's Blinkit in quick commerce (20-25% vs. 40-45%). This competitive pressure, along with rising operational costs like fuel prices, requires strategies like platform fee hikes, which might affect customer demand if rivals maintain lower pricing.

Profitability Path Uncertain Amid High Costs

The platform fee hike, while boosting immediate revenue, is a response to falling profit margins and rising operational costs. Swiggy's negative P/E ratio of -16.96 shows investors are skeptical about its profitability. The rapid expansion in quick commerce, despite high growth, has not shown a clear way to profit, unlike Zomato's Blinkit which reached EBITDA breakeven. Furthermore, Swiggy's food delivery segment reported a negative EBITDA margin of -0.2% in FY24, contrasting with Zomato's positive 2.8% margin in the same period. Depending on fee hikes and the possibility of customers leaving raises doubts about long-term growth. Management's focus on achieving contribution margin breakeven by Q1 FY27 is an important goal, but the widening net losses point to a difficult path ahead. Past trends show that while fee hikes can provide a short-term boost, whether the quick commerce model is truly viable is still being questioned.

Mixed Analyst Views on Swiggy's Future

Despite financial challenges, analyst views are mixed, with some recommending 'Buy' due to future potential and market leadership. Bernstein started coverage with an 'Outperform' rating, and some reports indicate an average price target suggesting significant gains. However, other analysts counsel caution, waiting for a clearer path to steady profit. Zomato, meanwhile, has more consistent positive analyst ratings, with many recommending 'Buy' and setting higher price targets, supported by its profits and Blinkit's success. Swiggy's ability to convert its high revenue growth into consistent profitability will be key to regaining investor confidence and bridging the gap between its current stock performance and its IPO valuation.

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