Swiggy IPO Details and Key Insights
IPO Overview and Key Dates for Swiggy
Swiggy, a prominent player in the food-tech sector, is set to launch its initial public offering (IPO) on Wednesday, November 6, with the subscription period closing on Friday, November 8. Shares are priced between Rs 371 and Rs 390, with investors required to apply in multiples of 38 shares. Swiggy aims to raise Rs 11,327.43 crore through this IPO, comprising a fresh issue of Rs 4,499 crore and an offer-for-sale (OFS) of 17.50 crore shares, totaling Rs 6,828.43 crore. Retail investors have a 10% reservation, and eligible employees are allotted up to 750,000 shares at a discounted price.
The listing is expected to occur on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on November 13, with share allotments slated for November 12. Kotak Mahindra Capital, Citigroup Global Markets India, Jefferies India, Avendus Capital, JP Morgan India, BofA Securities India, and ICICI Securities are serving as lead managers for the offering.
Swiggy’s Market Position and Business Model
Founded in 2014, Swiggy has established itself as a leader in online food and grocery delivery, leveraging a vast network of delivery partners to provide convenient on-demand services. Through its app, users can order food, groceries, and other household items. Despite its rapid growth and strong market presence, Swiggy faces challenges in achieving profitability, competing with well-funded rivals, and managing rising operational costs.
According to SBI Securities, Swiggy’s innovative approach to hyperlocal commerce, diverse offerings, and expanding partnerships provide a competitive edge. However, analysts like InCred Equities and Arihant Capital highlight the profitability challenges due to deep-pocketed competitors and the need for substantial investment in technology and logistics.
Pricing and Financial Metrics
Swiggy’s IPO price band reflects a valuation of 7.8 times price-to-sales, 7.3 times EV-to-sales, and a negative price-to-earnings (P/E) multiple of 37.40 times based on FY24 financials. The company posted a net loss of Rs 2,350.24 crore for the fiscal year ending March 2024 and a quarterly loss of Rs 611.01 crore as of June 2024.
The grey market premium (GMP) for Swiggy’s shares has fluctuated, currently standing around Rs 15 per share, indicating a modest listing gain of approximately 4% over the issue’s upper price band. Swiggy’s financials and growth prospects have attracted interest from major investors, including Norway’s Norges Bank and Fidelity.
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Future Prospects and Investment Considerations
Swiggy’s growth strategy focuses on expanding its service offerings and user base while enhancing operational efficiency. However, the company’s ability to achieve profitability remains uncertain, with analysts citing intense competition, reliance on discounting strategies, and rising operational expenses as potential hurdles.
With the quick commerce market projected to grow significantly, Swiggy’s IPO presents both an opportunity for investors to enter a dynamic market and a challenge due to the competitive pressures. Investors interested in Swiggy’s IPO may benefit from a long-term perspective, considering the tech-driven nature of its business, though the path to sustained profitability could be challenging.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Readers should consult with a financial advisor and perform their own research before making investment decisions.
Read analysis from Reuters – India’s Swiggy likely to price $1.35 bln IPO at 371-390 rupees/share, sources say | Reuters