July 31: Swiggy delivered a key milestone in Q1 FY27, with its quick-commerce platform Instamart reaching contribution break-even in May 2026 and closing the quarter at a contribution margin of -0.3percentage of Net Order Value, improving 594 basis points year-on-year. Instamart NOV grew 39percentage year-on-year to INR 58.2 billion, while Gross Sales increased 34percentage year-on-year to INR71.1 billion.
Swiggy’s Adjusted EBITDA loss remained flat quarter-on-quarter at INR 6.51 billion, while recurring PAT loss narrowed to INR 7.91 billion.
Instamart’s contribution loss, which had peaked at -7.4% of NOV in Q4 FY25, improved significantly to -0.3% in Q1 FY27 after crossing zero in May 2026. The improvement was primarily driven by higher monetisation, with adjusted revenue per order rising to ₹108 from ₹83 in Q4 FY25. Gross revenue increased to 21.2% of NOV from 20.5% a year earlier, supported by improved brand take-rates, advertising, and user fees.
Store-level performance also improved, with more than 45% of Instamart’s network now contribution-positive, compared with 30% a quarter earlier. Around a quarter of stores are operating at contribution margins of 3-5%, while five of the top seven cities have crossed contribution break-even. Adjusted EBITDA loss narrowed by ₹0.8 billion quarter-on-quarter to INR 7.78 billion.
With contribution break-even achieved, Instamart has regained flexibility to focus on growth. The company has guided for its contribution margin to remain within a zero to -100 basis point range and has restarted store additions. NOV increased 3% sequentially during the quarter, following the weaning of approximately four million unprofitable users over three quarters. Net Average Order Value rose 12.1% year-on-year to INR 508, supported by a richer non-grocery mix.
Management highlighted improving recent momentum, with four-week trending NOV growth reaching 10%, compared with 1% in the preceding four weeks. The company expects at least double-digit sequential growth and reported record one-month retention of 61%, compared with 55% in Q1 FY26.
Instamart is expected to add approximately 75 stores in Q2 FY27 across existing cities, against current network utilisation of around 40%. Adjusted EBITDA break-even is now anchored to an annualised NOV of approximately ₹600 billion and a 5-6% contribution margin. The business is expected to require a further improvement of approximately ₹30 per order, with two-thirds expected to come from monetisation. An inventory-led model, enabled once Swiggy qualifies as an Indian Owned and Controlled Company, could provide an additional ₹4-5 per order.
The Food Delivery business continued to compound steadily, with Gross Order Value growing 17.4% year-on-year, or approximately 18% when normalised for LPG-related restaurant cancellations. Monthly Transacting Users increased 17.8% year-on-year to 19.2 million, while Adjusted EBITDA stood at ₹2.92 billion. The 22 basis point quarter-on-quarter margin decline was attributed to seasonality, the AMJ wage cycle, and higher spending to ensure delivery-partner availability.
Swiggy reiterated its Food Delivery growth guidance of 18-20% and a steady-state margin target of 5%, with the growth guidance now stated excluding Toing. Transacting restaurant partners declined sequentially to 265.8 thousand from 275.4 thousand.
The Out-of-Home business continued to deliver strong growth, with GOV increasing 44.8% year-on-year to ₹15.3 billion and Adjusted EBITDA margin reaching a record 0.9%. Management is targeting an annualised GOV run-rate of ₹100 billion within two years, representing an estimated Adjusted EBITDA pool of approximately ₹5 billion.
Platform Innovations emerged as a new investment area, with losses more than doubling to ₹1.31 billion, driven by Toing.
Swiggy maintains a LONG rating with a September 2027 SOTP-based target price of INR 375, revised from INR 390 earlier. The valuation framework includes Food Delivery at 35x September 2028 EV/Adjusted EBITDA, Instamart at 0.25x September 2028 EV/NOV, OOH at 25x September 2028 EV/Adjusted EBITDA, and other businesses at 0.25x September 2028 EV/Sales.