Swiggy is sharpening its capital allocation strategy by shifting the focus of investments towards warehousing-led supply chain efficiencies, even as the pace of dark store additions moderates, management said during its latest investor call. The company’s capital expenditure is now clearly split between dark store infrastructure and a rapidly expanding warehousing network, with the latter emerging as a key lever to structurally improve efficiency and support growth across Tier 2 and Tier 3 markets.
Over the past four quarters, Swiggy has more than doubled its warehousing capacity, a move management said is helping reduce middle-mile costs, improve store replenishment cycles, and bring inventory closer to consumers in newer geographies.
While dark store additions have been relatively measured in recent quarters, the overall footprint of Swiggy’s dark store network has continued to expand on a rolling four-quarter basis. Management indicated that incremental capex will increasingly tilt towards warehousing, as the company seeks to hardwire supply-chain efficiencies into its operating model.
Despite ongoing expansion, Swiggy said its working capital remains under control. Over the last few quarters, net working capital increased by about ₹130 crore, even as net order value in its consumer businesses rose by nearly 18%.
The company reiterated that inventory days (DOH) have remained broadly stable, in line with earlier guidance, and added that further improvements in net working capital efficiency are expected in the coming quarters.
In its core food delivery business, Swiggy said margin expansion remains firmly on track. Despite pressure on take rates due to a reduction in consumer-facing fees, the company expanded its contribution margin by 30 basis points in the previous quarter.
Management reiterated its steady-state margin guidance of 4.5%–5% of gross order value (GOV), driven by a combination of operating leverage and contribution margin expansion. Over the past four quarters, Swiggy has already added 70 basis points of operating leverage, with further gains expected in the near term.
Addressing concerns around delivery costs, management clarified that margin improvement is not dependent on reducing earnings per hour for gig workers. Instead, efficiencies are being driven through higher network productivity, including intelligent order batching, density-led optimisation, and region-specific routing. Delivery cost reduction, the company said, is just one of six to seven levers influencing contribution margins, alongside factors such as order density, batching efficiency, and operational optimisation.
On the evolving gig economy regulations, Swiggy said it does not see any material risk to its profitability. While the legislative framework is still being finalised, management expects any incremental costs to be largely pass-through in nature, with no meaningful impact on the company’s P&L. The company added that initial signals from the Central Government remain broadly positive, though it will assess the final implications once the legislation is formally approved.
Overall, Swiggy signalled a clear shift towards structural efficiency, margin durability, and disciplined capital deployment, positioning warehousing scale, operating leverage and network productivity as the next phase of value creation.