Swiggy, India’s prominent food and grocery delivery platform, has recently come under scrutiny following a substantial tax demand notice from the Income Tax Department. The notice, amounting to ₹158.25 crore, pertains to the fiscal year 2021-2022 and highlights alleged discrepancies in Swiggy’s tax filings. This development has not only raised concerns within the company but has also had a noticeable impact on its stock market performance.
Details of the Tax Demand
On April 1, 2025, Swiggy received an assessment order from the Income Tax Department, Central Circle 1 (1), Bangalore, demanding unpaid dues of ₹158.25 crore for the period between April 2021 and March 2022. The alleged contraventions cited include:
- Cancellation Charges Paid to Merchants: The department claims that the cancellation charges paid to merchants were disallowed under Section 37 of the Income-tax Act, 1961.
- Interest Income on Tax Refunds: It is alleged that Swiggy did not offer tax on the interest income earned from income tax refunds.
In response, Swiggy has expressed its intention to appeal the order, stating that it believes it has strong arguments against the assessment and that the demand will not have a major adverse impact on its financials and operations.
Impact on Stock Market Performance
The announcement of the tax demand coincided with Swiggy’s stock performance, leading to noticeable fluctuations:
- Share Price Movement: On April 1, 2025, Swiggy’s shares closed at ₹331.55, marking a 0.5% increase from the previous day. However, on April 2, the stock opened 1% lower at ₹328.80 but later surged, trading 1.3% higher at ₹336.45.
- 52-Week Range: The stock has experienced significant volatility, with a 52-week high of ₹617.30 and a low of ₹312.65.
This volatility underscores the market’s sensitivity to regulatory developments and their potential implications for Swiggy’s financial health.
Company’s Financial Overview
As of its latest financial disclosures, Swiggy reported:
- Market Capitalization: Approximately ₹78,838 crore.
- Return on Equity (ROE): 33.41%, indicating efficient utilization of shareholders’ equity.
- Price-to-Earnings (P/E) Ratio: 30.43, suggesting that investors are paying ₹30.43 for every ₹1 of the company’s earnings.
- Debt-to-Equity Ratio: 0.15, reflecting a conservative approach to leveraging.
Historical Stock Performance
Over the past month, Swiggy’s stock has experienced fluctuations, with a high of ₹377.30 and a low of ₹312.65. The stock’s volatility is evident, with a daily average movement of approximately 2.45%.
Regulatory Challenges and Responses
This tax demand is not Swiggy’s first encounter with regulatory scrutiny. The company has previously received notices for unpaid dues related to cancellation charges paid to merchants during the financial years 2018 and 2019, amounting to ₹1.1 crore. Swiggy has indicated plans to appeal these assessment orders as well.
Market Outlook
The recent tax demand and its subsequent impact on Swiggy’s stock performance highlight the challenges faced by rapidly growing tech companies in navigating complex regulatory environments. Investors and stakeholders will be closely monitoring the developments of Swiggy’s appeals and their potential outcomes. The company’s ability to effectively address these challenges will play a crucial role in shaping its future market position and investor confidence.
