Introduction
Swiggy, one of India’s top food delivery and quick commerce platforms, is entering the public market with a ₹11,327 crore Initial Public Offering (IPO). For millennials and Gen Z investors who have watched Swiggy evolve from a food delivery giant to a multi-service platform, this IPO offers a unique chance to invest in the company’s growth and future.
Swiggy’s IPO launched on November 6 and will close on November 8, 2024, providing ample time for retail and institutional investors to consider its potential. Here’s a comprehensive look at Swiggy’s IPO, focusing on the company’s financials, key strategies, and the potential rewards and risks for investors.
Swiggy IPO – Key highlights
| Feature | Details |
| Issue Dates | November 6 – November 8, 2024 |
| Price Range | ₹371 – ₹390 per share |
| Total Issue Size | ₹11,327 crore |
| Retail Minimum Investment | ₹14,820 for 38 shares |
| Employee Discount | ₹25 per share |
| Listing Exchange | BSE, NSE |
Swiggy’s IPO consists of a fresh issue combined with an offer for sale (OFS), enabling both new investments and shareholder exits. Investors can expect shares priced in the range of ₹371 to ₹390, with a minimum retail investment set at ₹14,820 for 38 shares. Additionally, employees are being offered a discount of ₹25 per share, further encouraging their participation.
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Where will Swiggy use the IPO funds?
Swiggy plans to use the net proceeds from its IPO to partly or fully repay loans for its subsidiary, Scootsy. Additionally, Swiggy aims to reinforce its standing in the quick commerce sector by expanding its network of dark stores. The company also intends to allocate funds to improve cloud infrastructure, boost technology, and enhance brand visibility. Any remaining funds will go towards general corporate needs.
These targeted investments indicate Swiggy’s dedication to growth and operational efficiency, essential factors for future profitability.
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Swiggy’s financial snapshot
Swiggy has made notable strides in its financial performance, achieving a 36% increase in revenue from FY23 to FY24 while significantly reducing losses.
| Financial Year | Revenue (₹ Crore) | Net Loss (₹ Crore) |
| FY23 | 8,264 | 4,179 |
| FY24 | 11,247 | 2,350 |
The company’s revenue in FY24 reached ₹11,247 crore, a considerable jump from ₹8,264 crore in FY23. Net losses also dropped from ₹4,179 crore in FY23 to ₹2,350 crore in FY24, reflecting improved cost efficiencies and an increase in high-margin transactions.
While still operating at a loss, Swiggy’s ability to narrow these losses while expanding revenues shows promise for a path to profitability, especially as its quick commerce and delivery segments grow.
Investor sentiment and Grey market activity
Swiggy’s IPO has sparked mixed reactions from different investor segments. On the first day, the subscription rate was moderate, with retail investors leading at a 35% subscription. Here’s a snapshot:
| Investor Category | Subscription Rate |
| Qualified Institutional Buyers (QIB) | Yet to subscribe |
| Non-Institutional Investors (NII) | 3% |
| Retail Investors | 35% |
| Employee Portion | 50% |
Additionally, Swiggy’s IPO has seen fluctuating activity in the grey market, with initial grey market premium (GMP) at ₹18 per share dropping to ₹3. This volatility reflects investor caution, though there is still a projected listing gain of around 4.6%.
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Is Swiggy’s IPO a good investment for you?
Swiggy’s IPO offers a balanced opportunity with both growth potential and risks. Here’s a breakdown of what to consider:
Opportunities
- Quick Commerce Expansion: Instamart’s growth positions Swiggy well in India’s burgeoning quick commerce market.
- Diverse Revenue Streams: Swiggy’s varied services, from food delivery to grocery and logistics, enhance its resilience.
- Brand Recognition: With backing from prominent investors, Swiggy enjoys robust brand visibility.
Risks
- Ongoing Losses: Despite progress, Swiggy is not yet profitable, posing a risk to investors looking for quicker returns.
- Competitive Pressure: With strong rivals like Zomato, BlinkIt, and Zepto, maintaining market share in quick commerce and food delivery will be challenging.
For investors with a high-risk appetite and a long-term outlook, Swiggy’s IPO could be a viable opportunity. Financial analysts, including those from firms like Geojit Financial and Mehta Equities, recommend a “Subscribe” rating, advising patience as Swiggy’s operational efficiencies and growth initiatives take hold.
Conclusion
Swiggy’s IPO is more than just a fundraising event; it’s a bold step in its journey to redefine India’s quick commerce and food delivery markets. The IPO provides an entry point for investors interested in India’s evolving digital economy and quick commerce space.
For those who believe in Swiggy’s growth story and are comfortable with a degree of risk, this IPO presents a unique chance to participate in a company that’s continually expanding its reach and services. However, for short-term investors seeking immediate gains, the IPO may not meet expectations due to Swiggy’s ongoing losses and market challenges.
This IPO could be Swiggy’s ticket to achieving sustained growth and profitability in the long run. So, if you’re a millennial or Gen Z investor looking to diversify your portfolio, Swiggy’s IPO might just be worth the consideration.
