Mumbai, 15 April (IANS). Food delivery and Quick Commerce company Swiggi’s share price has fallen by 38 percent so far this year. The reason for the weak performance of the stock is to increase the loss and increase the pressure on the margin due to over -competition.
Swigy’s stock closed at Rs 334.5 at Rs 334.5 on Tuesday, compared to the Nifty’s gain of over two percent. This shows that the sentiment in the market is not positive about the stock.
Swigy’s stock has fallen by 26.64 percent in the last six months. At the same time, its stock has weakened 6.05 percent in the last one month.
Although the last five trading sessions have seen an increase of 4.29 percent in Swiggi’s stock, but a widespread trend remains negative.
Bank of America (Bofa) has downed Swiggi and rated the ‘Underperform’. Also, the target price has been reduced from Rs 420 to Rs 325.
The brokerage firm described the slow growth in the food delivery segment and the increasing competition in the Quick Commerce sector.
Bofa said that new companies giving huge discounts are likely to affect Swiggy’s profits in the near future due to increasing competition and over -marketing.
The brokerage firm said that this increased competition may increase marketing expenses and offer more discounts on the platform and a reduction in delivery fee for consumers.
Analysts say the biggest concern is that the profit from food delivery, which was once a stable source, is now being used to cover the deficit in Quick Commerce.
Analysts said that it is still difficult for Quick Commerce business to reach Breakven.
In the third quarter of FY 2024-25, the company recorded a loss of Rs 799 crore. In this, its deficit has increased by 39 percent as compared to the same period last year.
-IANS
ABS/Ekde
