Swiggy is preparing for its initial public offering (IPO) on the Indian stock exchange. Backed by SoftBank, Swiggy is expected to attract global institutional interest as it opens its IPO.
Swiggy’s IPO, opening on Wednesday, November 6, and closing on Friday, November 8, has a set price band of Rs 371 to Rs 390 per share.
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IPO Details
At the upper end of the price band, the IPO aims to raise up to Rs 11,327.43 crore, making it one of the larger public issues in India this year. This issuance comprises both a fresh issue and an offer for sale (OFS), enabling participation by new and existing investors.
Subscription Dates
Swiggy’s IPO will be open for public subscription from November 6 to November 8. The allotment is set to be finalized by November 11 and the listing is expected on November 13.
IPO Price Band
The price band is Rs 371 to Rs 390 per share. For retail investors, the minimum lot size will require purchasing 38 shares, amounting to a minimum investment of Rs 14,820 at the upper price limit.
IPO Size and Composition
At the higher end of the price range, Swiggy aims to raise Rs 11,327.43 crore. This includes Rs 4,499 crore through fresh equity shares and Rs 6,828.43 crore via an offer for sale (OFS) by existing shareholders.
Key stakeholders in the OFS include Accel India IV, Apoletto Asia Ltd, Tencent Cloud Europe B.V., and Norwest Venture Partners, who are partially divesting their holdings.
Investor Categories and Reservations
In Swiggy’s IPO, 75% of shares are allocated to Qualified Institutional Bidders (QIBs), 15% to Non-Institutional Investors (NIIs), and 10% to retail investors. A portion of the shares may be offered to employees at a discount of Rs 25 per share, according to the company’s disclosures.
Purpose of the IPO
Swiggy intends to channel a portion of the IPO funds toward expanding its subsidiary Scootsy, enhancing technology and cloud infrastructure, and increasing brand visibility. Additional funds may support acquisitions that align with Swiggy’s strategic objectives.
IPO Allotment and Listing Process
Investors may view allotment results by November 11. Refunds for unsuccessful applications and credits to demat accounts for successful applicants are expected by November 12, with the official listing anticipated on November 13.
Competitor Analysis – Swiggy vs. Zomato
Swiggy and Zomato dominate India’s food delivery market, capturing significant market share as Swiggy prepares for its IPO.
Zomato currently holds a lead in scale, maintaining a slightly higher market share in the food delivery sector and a more substantial presence in the fast-growing quick commerce segment.
Swiggy holds around 45% of the food delivery market and about 25% of the quick commerce market, an area it aims to expand.
Zomato has demonstrated stronger growth metrics in recent years, with a Compound Annual Growth Rate (CAGR) in gross order value of 23%, compared to Swiggy’s 15.5% CAGR.
Zomato’s average order value (AOV) growth outpaces Swiggy, showing its success in attracting higher-value orders.
Zomato has reached profitability, which has been notable in recent performance reports. Swiggy, however, has yet to achieve profitability, currently reporting operational losses.
The IPO may offer Swiggy a chance to bolster its financial position and scale, though challenges remain as it aims to enhance operational efficiency and expand customer acquisition.
Oversubscription from Global Investors
Swiggy’s IPO has gained attention from several international investors, including Norway’s sovereign wealth fund, Norges, and Fidelity, which have placed bids reportedly totalling $15 billion—over 25 times the allocation available for institutional investors.
This level of interest highlights the substantial demand seen among institutional bidders for Swiggy shares.
Financial Performance & Operational Adjustments
Swiggy operates in a highly competitive sector, contending with other significant players for market share. While it has yet to achieve profitability, Swiggy reported revenue of Rs 11,634.35 crore for the financial year ending March 2024, alongside a net loss of Rs 2,350.24 crore.
In the first quarter of FY25, Swiggy recorded revenue of Rs 3,310.11 crore with a net loss of Rs 611.01 crore, reflecting its continued efforts to scale despite current losses.
Lead Managers and Grey Market Trends
The IPO is managed by a consortium of investment banks, including Kotak Mahindra Capital, Citigroup Global Markets, Jefferies India, and JP Morgan, among others.
In the grey market, Swiggy’s IPO is currently trading at a premium of Rs 22 per share. This figure, though unofficial, indicates current market sentiment in secondary trading before the IPO.
Future Outlook
As the Diwali festival approaches, Swiggy has increased its platform fee from Rs 6 to Rs 10 per order, aligning with its competitor Zomato, which has also adjusted its fee to Rs 10.
In contrast, magicpin, a hyperlocal e-commerce app, has lowered its delivery fee to Rs 5 per delivery.
Swiggy is actively developing its AI-first, cloud-first infrastructure and exploring inorganic growth opportunities to enhance its market presence across various segments.
The company is investing in employee capabilities to better serve evolving customer demands and adapt to the increasing shift towards digital services.
Final Note – Readers are encouraged to conduct their own research and consult with a financial advisor before making investment decisions. MarketScope Daily is not responsible for any losses incurred as a result of reliance on this information.
