Swiggy Limited, India’s leading food delivery and quick commerce platform, opened its Initial Public Offering (IPO) for subscription on November 6, 2024, and will remain open until November 8, 2024. The company aims to raise ₹11,327.43 crore through a combination of fresh shares and an offer for sale (OFS). The price band for the IPO is set between ₹371 and ₹390 per share, with a lot size of 38 shares.
Swiggy raised approximately ₹5,085 crore in its anchor round, allocating 13.03 crore equity shares at ₹390 each to 75 anchor investors, including major domestic mutual funds such as ICICI Prudential, Kotak, SBI, Mirae, and Nippon Mutual Fund, as well as prominent global investors like Capital Group, Fidelity, Blackrock, and HSBC. This indicates strong interest from both domestic and international investors.
As of 1 p.m. on the first day of bidding, Swiggy’s IPO had achieved an 8% subscription, with 1.27 crore shares bid out of the 16 crore shares on offer. Retail investors led the demand, subscribing to 38% of the allocated portion, while non-institutional investors subscribed to 3%. The grey market premium (GMP) was ₹11, signaling moderate optimism regarding the stock’s listing performance. Swiggy’s shares are expected to be listed on the NSE and BSE on November 13, 2024, with allotment results due on November 11.
Swiggy posted a 34.8% year-on-year revenue growth in FY24, with total revenue of ₹3,222.2 crore. However, the company recorded a net loss of ₹611 crore. Despite this, Swiggy’s strategic focus on hyperlocal commerce and an expanding network of “Dark Stores” (local warehouses for faster delivery) is seen as key to driving its future growth. As of June 2024, Swiggy had a user base of 11.3 crore, with a growing number of Dark Stores, which increased from 301 in FY22 to 523 in FY24.
Swiggy’s IPO valuation is set at a price-to-sales ratio of 8x in the upper price band, offering a 76% discount compared to competitors like Zomato, which has sparked interest among investors. Analysts have mixed opinions, with some recommending the IPO for aggressive investors, while others are more cautious.
Arihant Capital suggests subscribing to aggressive investors, given Swiggy’s strong revenue growth and strategic investments in hyperlocal commerce, although the path to profitability remains challenging. The IPO is priced at a negative Price-to-Earnings (P/E) ratio of -37.40, based on FY24 earnings. Deven Choksey also recommends subscribing, citing Swiggy’s market position, innovation, and expanding network as factors for long-term growth. Meanwhile, SBI Securities advises a long-term subscription, noting Swiggy’s reasonable valuation relative to peers.
Key details of the IPO include the price range of ₹371 to ₹390 per share, a lot size of 38 shares, and an overall offering of ₹11,327.43 crore. The IPO is managed by Kotak Mahindra Capital, Citigroup Global Markets India, Jefferies India, Avendus Capital, JP Morgan India, BofA Securities, and ICICI Securities. Swiggy’s integrated platform, which combines food delivery, grocery services, and other offerings, is expected to help the company capture a larger share of India’s growing online delivery market. However, its reliance on digital advertising and premium services, along with competition from companies like Zomato and Dunzo, could impact customer retention if discounts decrease.
Investors should weigh the strong growth potential of Swiggy’s diversified platform and the quick commerce sector against the competitive landscape and Swiggy’s path to profitability. The IPO presents an opportunity for those looking at Swiggy’s long-term prospects.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Investors are encouraged to conduct their own research and consult with a qualified financial advisor before making any investment decisions. The IPO subscription and market performance are subject to risks, and past performance is not indicative of future results.
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