Why Swiggy is cancelling its Rapido ride

Swiggy had to make a decision: It had made a strategic investment in Rapido three years ago, but the ride-sharing company was now eyeing its stronghold of food delivery. Finally, in July, Swiggy chose to sell the 12% Rapido stake that it had bought for $180 million in 2022.

With this, Swiggy kills two birds with one shot: It avoids a potential conflict of interest in food delivery and raises a handsome amount that can surely help at a time when its quick commerce business is still burning cash. On Monday, Mint reported that Prosus is looking to take a big chunk of the 12% Rapido stake on offer, potentially raising around ₹2,825 crore. Mint looks behind the impending deal and examines how it gives Swiggy a little more breathing room.

How is Swiggy's cash position?

In November 2024, Swiggy raised ₹4,359 crore from its initial public offering, becoming India's second publicly listed food delivery company. Cash reserves, which stood at ₹8,183 crore at the end of December, fell to ₹5,354 crore at the end of the June quarter. Its burn rate—the rate at which it spends cash to cover expenses—has been ticking up, touching ₹1,053 crore in the June quarter. At this pace, Swiggy will run out of cash in four or five quarters, unless it raises more money.

Is this a problem?

Over the past two quarters, analysts have wondered if Swiggy needs to raise equity, or if it is comfortable with its cash chest. Swiggy claims its balance sheet is strong. The company expects its financial position to strengthen once its food delivery and dine-out businesses turn profitable. Swiggy also expects its quick commerce arm Instamart—which is driving cash burn—to turn profitable in June 2026. For every ₹100 Swiggy earns, it reports a loss of ₹24.

While Swiggy claims its losses have peaked, it remains to be seen whether Instamart will stop bleeding cash.

How does the Rapido sale help?

Dutch firm Prosus NV plans to purchase most of Swiggy’s Rapido stake, Mint reported. The deal may value Rapido at $2.5-2.7 billion, pegging Swiggy’s stake at around $320 million or ₹2,825 crore. If the sale happens, Swiggy's cash reserves will touch ₹8,179 crore. This will help the food delivery platform compete with Zomato, privately held Zepto, and Tata-backed BigBasket, which have deep pockets of cash.

Is there anything else Swiggy can do?

Listed companies have various options to raise money. They can borrow from banks or sell shares to investors through qualified institutional placements (QIPs). However, neither is a permanent solution—at the current burn rate, the stake sale will offer relief to the company for just about one year.

If Instamart turns profitable by June 2026 as Swiggy expects, the company won’t need more cash, said an analyst at a leading brokerage firm, requesting anonymity. “But if they fail to reach breakeven by then, they’ll have to consider raising more funds again, possibly three to four months or quarters after the Rapido stake sale, to support operations and growth”. The analyst added that competitors like Zomato, with deeper pockets, could apply pressure; so while this stake sale is helpful, it is only a short-term relief.