Swiggy Shares Drop 4% Amid Tamil Nadu Food Delivery Slowdown

The food delivery landscape in Tamil Nadu faced fresh turbulence as Swiggy, one of India’s leading food delivery platforms, saw its shares drop 3.88% to INR 423.20 during intraday trading on the Bombay Stock Exchange (BSE) on January 22, 2025. The decline marks the second consecutive day of losses for the company, reflecting broader concerns about the food delivery sector’s growth prospects.
The recent downturn has reduced Swiggy’s market capitalization to INR 94,966.13 crore (approximately $10.97 billion), highlighting growing investor apprehension about the sustainability of food delivery valuations. This development comes at a particularly crucial time for Tamil Nadu’s startup ecosystem, where food delivery services have been a significant driver of digital transformation.
“The current market response to food delivery stocks reflects a broader reassessment of growth expectations in the sector,” explains Dr. Rajesh Kumar, Senior Market Analyst at Chennai Financial Research. “Investors are particularly concerned about the path to profitability for food delivery platforms, especially in competitive markets like Tamil Nadu.”
The stock’s decline follows disappointing Q3 earnings reported by Swiggy’s primary competitor, Zomato, which has created a ripple effect across the food delivery sector. In the last five trading sessions alone, Swiggy’s stock has witnessed a substantial decline of nearly 13%, bringing it dangerously close to its November 2024 listing price of INR 412.
Despite these market challenges, Swiggy’s operational metrics in Tamil Nadu show some promising signs. The company’s Q2 FY25 results revealed a 4.78% reduction in consolidated net loss to INR 625.53 crore, compared to INR 657 crore in the previous year. Operating revenue demonstrated robust growth, increasing by 30% to INR 3,601.45 crore, with particularly strong performance in the Chennai metropolitan area.
The company’s food delivery business achieved a significant milestone by turning profitable, recording INR 121.93 crore in profit compared to a loss of INR 43.78 crore in the previous year. The quick commerce segment, Instamart, showed impressive growth with revenue increasing 114% year-over-year to INR 513 crore, though profitability remains a concern.
“While the market sentiment may be cautious, our fundamentals in Tamil Nadu remain strong,” stated a Swiggy spokesperson. “We’re seeing healthy growth in order volumes across tier-2 and tier-3 cities like Coimbatore, Madurai, and Trichy, which is crucial for our long-term success in the region.”
For Tamil Nadu’s startup ecosystem, Swiggy’s stock performance has broader implications. The state has been positioning itself as a hub for food-tech innovation, with numerous startups building solutions around the food delivery infrastructure. The current market volatility could impact funding availability for early-stage startups in the sector.
However, K. Saravanan, President of the Tamil Nadu Startup and Innovation Council, remains optimistic: “While we’re monitoring the situation closely, it’s important to note that market fluctuations are normal for growing sectors. Tamil Nadu’s robust digital infrastructure and strong consumer base continue to make it an attractive market for food-tech innovations.”
Looking ahead, Swiggy has outlined ambitious plans for its quick commerce business, Instamart, projecting contribution breakeven by Q3 FY26 and adjusted EBITDA breakeven by Q2 FY27. These targets will be crucial for rebuilding investor confidence and supporting the broader growth of Tamil Nadu’s digital economy.