Swiggy’s Path to Profitability with Instamart in Quick Commerce

Swiggy is aiming for overall profitability between December 2025 and June 2026, with its quick commerce branch, Instamart, playing a crucial role in this turnaround. This objective was outlined during the Q1 FY26 earnings call with market analysts and investors.

Instamart’s Growth in Quick Commerce

Instamart has shown substantial growth, with Gross Order Value (GOV) more than doubling at 108% year-on-year. The average order value (AOV) also saw significant increases of 26% year-on-year and 16% quarter-on-quarter, exceeding expectations. This success has been attributed to the effective basket-building initiative known as Maxxsaver, which encourages customers to make larger purchases.

Improvements in Contribution Margins

Swiggy’s Chief Financial Officer, Rahul Bothra, confirmed that contribution losses for Instamart reached their peak in previous quarters, and there has been an improvement in contribution margins by 100 basis points sequentially. The expectation for even greater improvements in Q2 FY26 was communicated. Bothra stated, “We stay committed to our goal of achieving contribution margin neutrality between the December and June quarters of 2026.”

Expansion and Operational Focus

Despite the rapid growth of Instamart, Swiggy expanded its network significantly, adding over 316 stores in Q4 FY25. The company believes its existing network of 4.3 million sq. ft. is adequate to support 100% growth without needing major new additions. The focus will now shift towards enhancing operations in current locations instead of expanding into new cities.

Shifts in Product Offerings

Interestingly, the non-grocery selections on Instamart, which accounted for 6.6% of the total mix a year ago, now contribute 18.5%, indicating strong interest in higher-ticket items. Although increased delivery costs and marketing expenditures slightly affected margin gains, optimism about long-term monetization through seller commissions and advertising remains high.

Food Delivery Growth Amidst Competition

While Instamart took the lead in discussions, Swiggy’s food delivery sector also reported a healthy 18.8% year-on-year GOV growth. The company claims to maintain the best service time in the industry, with initiatives such as Swiggy Bolt (its 10-minute delivery model) accounting for over 10% of order volume. Continuous investments in Bolt and SNACC, its experimental cloud kitchen brand, are ongoing, though losses in the “platform innovations” segment increased during the quarter.

Strong Cash Reserves

In terms of cash flow, Swiggy has reserves of Rs 5,500 crore, which allows the company to avoid needing an equity raise. An exit from its stake in Rapido has been hinted at due to competition overlaps in the food delivery sector.

Management’s Confidence in Quick Commerce

Despite the growing competitive landscape, particularly in quick commerce, management remains confident. Chief Executive Sriharsha Majety highlighted that the speed of delivery and customer experience at Swiggy are strong and that there is no need to match competitors on store density if it does not impact service quality.

A Balanced Strategy for the Future

With a balanced approach towards consolidation, monetization, and careful reinvestment, Swiggy is optimistic that Instamart’s momentum will propel the company into profitability in FY26.