India’s online food delivery sector is abuzz with the news of Swiggy’s upcoming IPO. Swiggy Limited, one of the country’s largest food and grocery delivery platforms, is set to debut on the stock market, making waves in the investor community.
With this IPO, many potential investors are questioning whether to apply or avoid. In this comprehensive review, we’ll explore everything you need to know about the Swiggy IPO, including the details, risks, opportunities, and whether this investment is worth considering.
Overview of Swiggy
Swiggy was founded in 2014 as a food delivery platform, quickly expanding its services to include groceries through Instamart, and logistics solutions with Swiggy Genie.
The company operates across over 500 Indian cities, with a fleet of over 200,000 delivery executives and a strong customer base.
Now, with its much-anticipated Initial Public Offering (IPO), Swiggy is looking to raise capital to fuel further growth, reduce debt, and strengthen its market position.
Key Details of the Swiggy IPO
| Key Details | Information |
| IPO Size | ₹11,000 crore |
| Fresh Issue | ₹3,750 crore |
| Offer for Sale (OFS) | ₹7,250 crore |
| Use of Proceeds | – ₹137 crore for debt repayment- ₹982 crore for dark store expansion – ₹586 crore for technology and cloud infrastructure – ₹930 crore for marketing and promotion – ₹1,115 crore for general corporate expenses and acquisitions |
| Swiggy’s FY24 Revenue | ₹11,247 crore |
| Swiggy’s FY24 Loss | ₹2,350 crore |
| Listing Exchanges | BSE and NSE |
| IPO Date | Expected in October 2024 |
| Swiggy Pre-IPO Share Price | ₹490 (as of September 2024) |
| Lead Managers | Axis Capital, Kotak Mahindra Capital, Morgan Stanley |
| Anchor Investors | Accel, Prosus, Tencent, SoftBank |
| Swiggy’s Market Presence | Operating in over 500 cities in India |
| Retail Quota | Reserved for retail investors |
| QIB Quota | Reserved for Qualified Institutional Buyers (QIBs) |
| Shareholder Quota | Allotted for Swiggy shareholders |
The Swiggy IPO is expected to raise ₹11,000 crore, consisting of a fresh issue of ₹3,750 crore and an offer-for-sale (OFS) of ₹7,250 crore. Early investors, including Accel and Prosus, are expected to offload shares through the OFS.
The Swiggy IPO Price is yet to be finalized, but market buzz points to a potential price band of ₹500-550 per share. The offering will be open to institutional investors, retail investors, and qualified institutional buyers (QIBs). Swiggy IPO Date is set for November 2024, although roadshows are expected to begin in the upcoming weeks.
Also Read: Upcoming IPOs With Shareholder Quota in 2024
Utilization of IPO Proceeds
Swiggy has ambitious plans for the capital raised. A substantial portion of the funds will go towards expanding Instamart and paying off debt:
| Key Details | Amount (INR crores) | Percentage (%) |
| Utilization of Proceeds: | ||
| Investment in Scootsy (debt repayment) | ₹137.4 | 3.66% |
| Investment in Scootsy (Dark Store expansion and lease payments) | ₹982.4 | 26.16% |
| Investment in technology and cloud infrastructure | ₹586.2 | 15.63% |
| Brand marketing and business promotion | ₹929.5 | 24.79% |
| Funding inorganic growth and general corporate expenses | ₹1115.25 | 29.74% |
- ₹982 crore (27%) will be used to expand Swiggy’s dark store network through its subsidiary, Scootsy.
- ₹930 crore is allocated for brand marketing and promotion, and another ₹586 crore will fund technology and cloud infrastructure.
- A remaining ₹1,115 crore is earmarked for general corporate purposes and potential acquisitions.
CNBC Research: Swiggy vs. Zomato
Here are 5 key points from the discussion on Swiggy and Zomato:
- Market Competition: Swiggy and Zomato are competing not only for user downloads and food delivery but also for investor capital as Swiggy prepares for its IPO.
- Financial Performance: In FY24, Swiggy reported revenues of ₹11,250 crores with significant losses, while Zomato had higher revenues at ₹12,000 crores and turned a profit.
- Operating Metrics: Zomato has shown better operating metrics, including a positive EBITDA, compared to Swiggy’s substantial losses, highlighting the disparity in financial health.
- Quick Commerce Growth: Both companies are expanding their quick commerce verticals, with Zomato’s Blinkit outperforming Swiggy’s Instamart in revenue and margins.
- Valuation Insights: Current market cap estimates for Swiggy range from ₹1.5 lakh crores to ₹1.6 lakh crores, suggesting a significant discount compared to Zomato’s valuation, influenced by their market share and operational efficiency.
Pre-IPO Buzz and Share Price Surge
Leading up to the IPO, Swiggy’s shares in the unlisted market have surged significantly, driven by investor enthusiasm. The share price jumped from ₹355 in July to ₹490 by September 2024, reflecting a nearly 40% rise. This Swiggy pre-IPO stock trend highlights the strong demand for Swiggy’s shares, further fuelling speculation about its stock market debut.
Swiggy’s Financial Performance
Image Source:Swiggy IPO: Check IPO date, Price range & Lot size
Swiggy has seen remarkable growth in recent years. For FY24, Swiggy’s revenue rose by 36% year-on-year, reaching ₹11,247 crore, while its losses were reduced by 44% to ₹2,350 crore.
Despite these improvements, the company is still facing consistent losses, largely due to high operational and marketing expenses. However, with the IPO proceeds, Swiggy aims to further optimize costs, scale operations, and reduce its reliance on external funding.
Swiggy IPO Allotment & Listing
The Swiggy IPO Allotment process will determine how shares are distributed among investors. Retail investors will likely have a smaller portion allocated due to high demand, while institutional buyers may dominate the subscription numbers.
Once the allotment is finalized, Swiggy’s shares will be listed on the stock exchange. The Swiggy IPO Listing date is expected to be sometime in late November or early December 2024, depending on market conditions.
Strengths of Swiggy
Swiggy has several strengths that make its IPO attractive:
- Market Leader: Swiggy dominates India’s food delivery sector and has a solid presence in the quick commerce segment with Instamart.
- Revenue Growth: The company has consistently increased its revenue, driven by growing demand for food and grocery delivery services.
- Technological Edge: Swiggy leverages machine learning and data analytics to improve user experience, optimize delivery times, and enhance its operational efficiency.
- Diversified Offerings: Apart from food delivery, Swiggy has expanded into grocery deliveries, pick-up services, and more, reducing its dependence on a single revenue stream.
- Geographical Reach: With operations in over 500 cities, Swiggy is well-positioned to cater to a large and diverse customer base.
Risks of Swiggy
Despite its strengths, potential investors should be aware of several risks:
- Consistent Losses: Swiggy has yet to achieve profitability, with ongoing losses due to high advertising and delivery costs.
- Dependence on Quick Commerce: A large part of Swiggy’s future growth hinges on its quick commerce platform, Instamart. Any mismanagement or failure to scale this service could impact its overall performance.
- Market Competition: Swiggy faces fierce competition from Zomato, Blinkit, and Zepto. Changes in consumer preferences or better offers from competitors could lead to a loss of market share.
- Regulatory Changes: The e-commerce and food delivery sectors are subject to government regulations, which could impact Swiggy’s business model or increase operational costs.
- Valuation Concerns: Given Swiggy’s high valuation, some investors may be concerned about whether the company can justify its price in the long run, especially considering its lack of profitability.
Swiggy IPO Subscription Status
The Swiggy IPO Subscription Status will provide insights into investor interest. With anchor investors like Accel and Prosus participating, early signs point to a strong subscription, but retail and non-institutional investors should closely monitor this metric before deciding whether to apply.
Should You Apply?
Investors should carefully consider both the potential rewards and risks of Swiggy’s IPO before making a decision. While Swiggy’s dominance in the food and grocery delivery market, coupled with its strong revenue growth, makes it an attractive investment, the company’s ongoing losses and reliance on the quick commerce segment are significant red flags. Additionally, the competitive landscape remains fierce, and Swiggy will need to continue innovating to maintain its edge.
For long-term investors willing to ride out short-term volatility, Swiggy’s IPO could present a unique opportunity to invest in one of India’s leading unicorns. However, those with a lower risk tolerance may want to wait for the Swiggy IPO Allotment Status to see how the shares are priced on listing day.
Final Thoughts
Swiggy’s IPO is one of the most anticipated public offerings of 2024, and it promises to attract significant attention from institutional and retail investors alike. With a solid market presence, impressive growth figures, and ambitious expansion plans, Swiggy has positioned itself as a strong contender in the fast-growing online delivery space. However, like any investment, this IPO comes with risks, and investors should weigh their options carefully before making the final call.
The Swiggy IPO Price Today, along with its upcoming subscription status, will play a crucial role in determining investor sentiment. Stay updated with the latest news on Swiggy IPO Date, Swiggy IPO Listing, and more to make an informed decision.
Source: DRHP
