Food-tech firm Swiggy will re-evaluate its investment in ride-hailing startup Rapido, citing a potential conflict of interest as the mobility company recently entered the food delivery space.
“Rapido is now the largest mobility player in India by rides, and has been a disruptor in its space. As a shareholder, we are extremely happy with their success and value-creation; but do acknowledge a potential conflict of interest that may arise in the future,” said Swiggy in its letter to shareholders on Thursday.
It added, “Our 12% minority stake has appreciated significantly since our investment (basis incoming interest) and we are actively re-evaluating our investment due to the above developments.”
Rapido entered the food delivery space in June through a pilot called ‘Ownly’ in Bengaluru, charging restaurants a fixed fee per order. A proposal shared with restaurants shows that Rapido is positioning itself as a zero-commission, value-focused alternative to Swiggy and Zomato.
Swiggy invested in Rapido in 2022. It holds approximately a 12% stake in Rapido which is valued at around Rs 1,020 crore based on Rapido's current valuation of just over Rs 8,500 crore. The ride-hailing company, which competes with Ola and Uber, has raised around $600 million so far.
"Food delivery continues to attract new competition, with new players or models trying to enter this high-frequency, high customer-intent category every year. The key question is what new competition will unlock for the consumer, which we are not already doing at scale. Many of the new offerings we have created (including on affordability) and will continue to roll out, will be towards ensuring that competition does not get a clear opening." Swiggy stated in the letter.
The company further said there is a new model that can unlock incremental growth in the category, and it will definitely be super agile and make sure it participates in this very quickly.
Meanwhile, Swiggy on Thursday reported widening of its net losses to Rs 1,197 crore in the first quarter of FY26, compared to Rs 611 crore in the year-ago period. The losses were led by the quick commerce division Instamart, where the losses widened significantly from the year-ago quarter.
Revenue from operations for the company in Q1FY26 rose 54% YoY to Rs 4,961 crore.
Swiggy’s management attributed the higher losses to scale-driven growth across verticals and reiterated its focus on long-term sustainable profitability. Chief Executive Officer Sriharsha Majety said continued investments align with their vision of creating convenience at scale.
“Q1 is a seasonal low for availability of delivery partners given reverse-migration and beginning of rains, and hence incremental investments into their availability are made every year by food delivery platforms. Bunched with our regular annual appraisal cycle in Q1, this has kept our adjusted EBITDA margin at 2.4 per cent (vs 2.9 per cent in Q4); a seasonal impact which will normalise as the year progresses,” said Majety on the food delivery business.
On the quick commerce business, he stated, “In Q1, we expanded operations to 127 cities (vs 124 in Q4), and added dark stores selectively for alleviating capacity constraints or creating coverage in specific pockets that demonstrated the need. Our focus has been on improving wallet-share by increasing basket size, which is one of the prime determinants of long-term profitability.”