Growth Vs Profitability: Swiggy’s Tug-Of-War

Swiggy’s results for the second quarter (Q2) of the financial year 2026-27 (FY27) show that the tug of war between growth and profitability is intensifying, as Instamart’s mounting losses threaten to overshadow the improving performance of its food-delivery business.

On October 23, 2026, the company’s shares fell around 15% to ₹179.90 on the BSE, wiping out roughly ₹9,000 Cr in market capitalisation in a single session. The sell-off came after Swiggy reported its results, with widening losses at Instamart overshadowing improving profitability in its food delivery business. The stock has also lost more than half its value since its market debut in November 2024. 

The company’s revenue from operations increased 36.1% YoY to ₹7,571 Cr in the September quarter. Its consolidated net loss narrowed to ₹922 Cr from ₹1,092 Cr a year earlier, but widened from ₹791 Cr in the preceding quarter. 

The contrast within the business is becoming more pronounced. Food delivery reported record adjusted EBITDA, supported by advertising revenue and delivery efficiencies. Instamart, meanwhile, saw its adjusted EBITDA loss widen to ₹895 Cr from ₹849 Cr a year earlier, even as its net order value (NOV) grew 13.4% sequentially.

This has put investors in a spot, questioning whether Swiggy’s rising investments today can deliver sustainable returns tomorrow. Or will the coming quarters reveal whether Instamart’s renewed growth can translate into better margins? But before that…

Instamart’s Growth Comes At A Cost

Instamart’s Q2 numbers show a recovery in growth momentum, but not yet a corresponding improvement in profitability. The business’s net order value (NOV) rose 13.4% QoQ to ₹6,594 Cr in Q2 FY27 against 2.5% growth in the preceding quarter. Orders rose 29.3% YoY to 130 Mn. Instamart added 1.3 Mn monthly transacting users during the quarter, taking its user base to 14.8 Mn, up 23% YoY.

These are meaningful signs of demand. Management has also pointed to higher order frequency and stronger retention in the earnings call as evidence that Instamart is building shopping habits rather than relying solely on one-off purchases. Its strategy is to deepen engagement through everyday categories such as fresh produce and staples, while using differentiated assortment to give customers reasons to return.

However, customer and order growth are only one side of the story. Instamart’s adjusted EBITDA loss widened to ₹895 Cr in Q2 FY27, while its contribution margin deteriorated. According to the foodtech’s shareholders’ letter, Instamart reported a contribution margin of -1.0% of gross order value (GOV). The number suggests that the business is still spending heavily to attract and retain customers, fulfil orders and build out its network.

“This creates a difficult trade-off. Promotions and pricing investments can help drive orders, while more stores can improve proximity and delivery speed. But both require capital and operating expenditure. Unless higher order volumes, better monetisation and denser delivery networks improve the economics of each order, growth can continue to increase the absolute loss,” an industry source said.

The Swiggy management believes Instamart’s customer cohorts are becoming more productive and that differentiated assortment can improve retention over time. The company is also working to increase revenue per order through product mix, private labels and advertising, while reducing costs through network densification, automation and operating leverage.

The break-even ambition, however, remains elusive. Management has said Instamart needs to reach roughly 2.3X its current scale, with annualised NOV of around ₹60,000 Cr against approximately ₹26,400 Cr at present, alongside a contribution of about ₹30 per order. Swiggy estimates that roughly two-thirds of the improvement needed would come from higher revenue per order and the remainder from lower costs per order.

This is a roadmap rather than a near-term result. The company has not been able to give a detailed timeline for reaching break-even or quantify how much each lever would contribute. Investors will, therefore, need to look beyond headline growth and track whether contribution margin, order economics and adjusted EBITDA improve together.

Management expects double-digit sequential NOV growth in Q3 and an improvement of around 100 basis points in adjusted EBITDA margin QoQ. This makes the next quarter an important juncture.

Blinkit Raises The Bar For Instamart

Instamart’s challenge is not simply to grow. It has to build a network capable of competing with Blinkit while improving the economics of that expansion.

The difference in store footprint is also considerable. Instamart added 69 net dark stores in Q2 FY27, taking its total to 1,240 across 133 cities. Blinkit added 308 stores during the same quarter, taking its network to 2,751. Blinkit’s network is now more than twice the size of Instamart’s.

Scale matters in quick commerce because it affects how close a platform can be to customers, how efficiently it can fulfil orders and how much volume it can route through its network. A larger footprint can also provide more opportunities to improve availability and spread certain operating costs. But store count alone does not establish which business has better economics: store maturity, order density, basket size, local competition and the cost of operating each location all matter.

The financial contrast in Q2 is also stark. Blinkit reported positive adjusted EBITDA of ₹184 Cr, compared with Instamart’s adjusted EBITDA loss of ₹895 Cr. Blinkit’s NOV grew 22.2% sequentially, ahead of Instamart’s 13.4% growth. 

Eternal’s management has cited store paybacks and lower competitive intensity in Tier II markets, while maintaining its FY29 EBITDA ambition for Blinkit. In contrast, Swiggy has emphasised building customer habits, improving retention and developing its existing Tier I and II network. 

Instamart’s management did not commit to a new accelerated expansion plan in the earnings call, suggesting the near-term focus is on making the existing network more productive rather than simply matching Blinkit store for store.

“There is a reasonable case for this approach. Adding stores without sufficient local demand can dilute returns, and a smaller network can still be productive if it generates enough orders per location. But restraint also carries a risk: a weaker physical footprint can limit reach and availability in a market where speed and convenience are central to the proposition,” the executive quoted above said.

Therefore, the key question is whether Instamart can close the gap through better throughput, assortment and monetisation, rather than relying primarily on expansion. 

Swiggy’s shareholder letter also points to a planned transition to an inventory-led model, under which Instamart would own the inventory it sells. Management expects this to improve contribution margin by around 80 basis points and shorten the working-capital cycle. The transition is expected to begin mid-Q3 FY27 and take two to three quarters to complete.

What Can Support Swiggy’s Valuation?

Swiggy’s market fall also reflects the tension between a relatively stronger food delivery business and a quick commerce operation that continues to consume substantial resources.

Food delivery GOV grew 17.7% YoY to ₹10,054 Cr in Q2 FY27. Adjusted EBITDA increased 42% to ₹341 Cr, with the adjusted EBITDA margin improving to 3.4% from 2.8% a year ago. Higher advertising revenue and delivery efficiencies supported the performance. 

This business provides an important counterweight to Instamart’s losses. Its profitability shows that Swiggy can generate operating earnings from an established marketplace, even as it continues to invest in newer businesses. It also gives the company a base from which to fund growth.

The difficulty is that stronger food-delivery performance has not yet offset the pressure from Instamart. Swiggy’s consolidated net loss widened sequentially, and analysts have questioned whether its quick commerce growth is keeping pace with expectations. 

Citi, for instance, noted that Instamart’s sequential NOV growth was below its estimate, while its adjusted EBITDA loss was higher than expected. CLSA also flagged slower-than-expected growth and wider losses, while other brokerages have lowered price targets amid concerns about execution and the time required to reach profitability. 

This, however, does not mean that Instamart’s growth strategy cannot work. Quick commerce requires upfront investment in stores, inventory, customer acquisition and logistics, and some of those costs may become more efficient as order density improves. The issue is how long investors should be expected to wait for those benefits.

Therefore, Swiggy’s immediate task is to show that Q2 was a turning point in loss trajectory, as management expects, rather than another quarter in which growth came at a higher cost. The next set of results will need to show sustained sequential NOV growth alongside improving contribution and adjusted EBITDA margins. Customer additions will matter, but so will repeat ordering, store productivity and the extent to which revenue per order rises.

The inventory-led transition will be another milestone to watch. For now, as Swiggy continues to get stuck in a tug-of-war between profitability and growth, its market fall is a reminder that revenue growth alone is unlikely to reassure investors.

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[Edited by Shishir Parasher]

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