Swiggy’s IPO opened with a relatively slow response from investors on its first day of subscription.
As of 12:18 PM on Wednesday, November 6, the IPO had received bids for 1,10,51,578 shares out of the total 16,01,09,703 shares available, leading to a subscription rate of only 0.07 times. This slow uptake could raise questions about market sentiment toward the company.
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Weak Subscription Across Investor Categories
The breakdown of the subscription by investor type reveals a subdued interest across most segments. Retail Individual Investors, typically a major source of demand in IPOs, have shown a subscription rate of 0.35 times.
While this indicates some interest, it falls short of expectations for such a high-profile offering.
Non-Institutional Investors (NIIs) have shown even less enthusiasm, with a subscription rate of only 0.03 times, pointing to a lack of significant interest among affluent investors.
Qualified Institutional Buyers (QIBs), the key drivers of most IPOs, have also shown minimal activity, bidding only 532 shares out of the 8,69,23,475 shares allocated to them. This indicates weaker-than-expected institutional demand at this stage.
Interestingly, the employee quota has seen a relatively stronger response, with a subscription rate of 0.50 times, reflecting slightly more interest compared to general investor categories.
The public subscription has been relatively slow so far. As of Day 1, the IPO’s subscription status is as follows:
- QIB (Qualified Institutional Buyers): NIL
- NII (Non-Institutional Investors): 3%
- Retail Investors: 35%
- Employee Portion: 50%
Grey Market Premium
Despite the lower-than-expected subscription figures, the Grey Market Premium (GMP) for Swiggy shares shows a modest increase of Rs 12, or 3.08% above the upper end of the IPO price band (Rs 390).
The GMP, an unofficial indicator of potential listing gains, can fluctuate based on various factors such as investor sentiment and market conditions.
The IPO price band is set between Rs 371 and Rs 390, with a minimum bid lot size of 38 shares. Swiggy aims to raise up to Rs 11,327.43 crore, a portion of which will be allocated through a mix of fresh issue shares and an offer for sale (OFS), providing liquidity to the company and its early investors.
Key Details of Swiggy’s IPO
Swiggy’s IPO officially opened on November 6, with a price band ranging from Rs 371 to Rs 390 per share. The subscription window remains open until Friday, November 8. Despite the subdued response from retail investors, institutional backing for the IPO has been strong.
On November 5, Swiggy raised Rs 5,085.02 crore from its anchor book, indicating significant interest from institutional investors.
The company is seeking to raise Rs 11,327 crore through the IPO, which includes a fresh issue of Rs 4,499 crore and an OFS component of Rs 6,828 crore.
The OFS enables venture capital firms like Accel India, Tencent Cloud Europe, and Alpha Wave Ventures to exit or partially exit their investments. These early investors had acquired shares at prices ranging from Rs 11.17 to Rs 178.90 per share, according to company disclosures.
Swiggy’s IPO Context
Swiggy’s financial performance provides further context to its IPO response. The company reported a narrowed loss of Rs 611 crore for the quarter ending June 2024, compared to a loss of Rs 564 crore in the same period the previous year.
While the company’s revenue growth has been strong, driven by increased demand in the food delivery and quick-commerce sectors, profitability remains a key challenge.
The IPO proceeds are expected to fund Swiggy’s investments in technology, cloud infrastructure, brand marketing, and debt repayment, positioning the company for future growth.
Its ongoing struggle with profitability and investor concerns about long-term sustainability could influence subscription demand during the remainder of the offering.
Outlook for Swiggy IPO
The early signs from Swiggy’s IPO are mixed, with slow subscription rates and moderate GMP. However, the IPO remains open for subscription until November 8, and investors may choose to place their bids closer to the closing date.
It is important to note that IPO subscription trends can shift as more information becomes available about the company’s future growth prospects and strategic plans.
While current investor caution may be attributed to Swiggy’s profitability concerns and competition from other players like Zomato, the IPO could still see increased demand in the final days, particularly if institutional investors increase their bids.
Disclaimer – This article is for informational purposes only and should not be considered as investment advice. All opinions, projections, or forecasts are based on the information available at the time of publication and are subject to change without notice. MarketScope Daily does not guarantee the accuracy or completeness of the information provided, and readers should conduct their own research or consult a financial advisor before making any investment decisions. MarketScope Daily is not responsible for any financial losses resulting from the use of this information.
