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Swiggy’s 2QFY27 performance was broadly in line with expectations, but lagged Eternal’s: Qcom NOV grew 13.4% qoq (Eternal: 22.2%), while Food Delivery (FD) GOV grew 17.7% yoy (Eternal NOV: 21.5%). FD adj EBITDA grew 41.8% yoy to Rs3.41bn, while InstaMart adj EBITDA losses rose to Rs8.95bn, from Rs7.78bn in 1Q. Management stated that adj EBITDA losses have peaked in this quarter and it would be able to breakeven at 2.3x the scale. We increase QCom FY27-28 adj EBITDA loss estimates by 4.6%/16.7% and believe scale, sustainable improvement in OPD per store, and take rates would be necessary to give value to the QCom business. Adj EBITDA losses in Platform Innovation business, which houses Toing, increased to Rs1.62bn from Rs1.31bn in 1Q. Management believes Toing is driving incremental category growth, but it needs another 1-2 quarters to assess the model’s scalability and efficacy. With increasing QCom and Platform Innovation losses, we cut our TP by ~11% to Rs310 from Rs350, largely on cuts to QCom valuations; retain BUY.

FD – Margin catch-up continues; Toing still just an experiment

FD GOV grew 17.7% yoy to Rs100.5bn, trailing Zomato’s 21.5% NOV growth, but adj EBITDA rose 42% yoy to Rs3.41bn against Zomato’s 25%, a catch-up from a lower margin base. At 3.4% of GOV, margin sits ~160bp below management’s 5% steady-state guidance; operating leverage and monetization are the levers to close it. Toing is the swing factor. Despite a 50+ city footprint, it remains an experiment: repeat-user unit economics turned positive only in select early markets, and management wants 1-2 more quarters to prove sustainability and scalability before scaling aggressively. Given Toing’s scale and ongoing EBITDA losses, the street’s focus is unit economics and cash burn.

QCom – Heartening operating recovery, but a long catch-up runway remains

Instamart's NOV growth accelerated to 13.4% qoq (vs 2.5% in 1Q), though it continued to lag Blinkit's 22.2% growth despite operating on a 3.2x smaller NOV base. Underlying operating metrics improved, with frequency rising ~4% qoq to 2.93x, OPD per dark store increasing 9.5% qoq to 1,192, and direct costs per order declining 1.5% qoq to Rs107. While the operational recovery is heartening, Instamart still lags Blinkit meaningfully. A 140bp qoq contraction in take rates led to 110bps contribution margin deterioration to -1.4% of NOV. We believe the market currently ascribes negligible value to Instamart, considering challenges in improving scale with profitability. We believe that improvement in OPD per store and take rate would be the key monitorables for a potential rerating

Outlook and valuation – FD underpins valuation

We see Swiggy as a strong FD franchise with operating leverage and QCom as an optionality. We await sustained double-digit sequential NOV growth in Instamart, alongside improving customer retention, monetization, and store utilization, before assigning a higher valuation. We maintain BUY with a DCF-based TP of Rs310. We value FD at Rs578bn (Rs209/share), implying 33.7x FY28E EV/adj EBITDA, and QCom at Rs85bn (Rs31/share), implying 0.22x FY28E EV/NOV.

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