Swiggy, the food and grocery delivery giant, is gearing up for its much-anticipated stock market debut with an Initial Public Offering (IPO) scheduled for early November. With a price band set between ₹371 to ₹390 per share, Swiggy aims to raise over ₹11,000 crore. In this article, we’ll provide a detailed breakdown of the Swiggy IPO, including key dates, pricing, objectives, and a comparison with its competitor, Zomato.
Swiggy IPO Details: Key Information for Investors
- Swiggy IPO Dates: The IPO will open for public subscription on Wednesday, November 6, and will close on Friday, November 8.
- Price Band: The IPO price band has been set between ₹371 to ₹390 per share. Investors will need to make their bids within this range.
- IPO Size: Swiggy aims to raise ₹11,327.43 crore from this offering. The issue is composed of:
- A fresh issue of 11.54 crore shares, valued at ₹4,499 crore.
- An offer for sale (OFS) of 17.51 crore shares, worth ₹6,828.43 crore.
- Lot Size: The minimum lot size for application is 38 shares. At the upper price of ₹390, retail investors will need a minimum investment of ₹14,820.
- Investors in the Offer for Sale (OFS): Several prominent investors, including Accel India IV, Alpha Wave Ventures, and Tencent Cloud Europe, will be selling shares as part of the OFS.
- Reservation Quotas: Swiggy has set aside 75% of its shares for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 10% for retail investors. Additionally, 750,000 shares have been reserved for Swiggy employees, who will receive a ₹25 discount per share.
Objectives of the Swiggy IPO
Swiggy plans to use the proceeds from this IPO to achieve several key business objectives, including:
- Investment in Scootsy, a material subsidiary.
- Enhancing its technology and cloud infrastructure.
- Brand marketing and business promotion to improve Swiggy’s platform visibility across India.
- Inorganic growth through potential acquisitions.
- General corporate purposes, ensuring the business remains competitive in a rapidly evolving market.
Swiggy’s Financial Performance
Swiggy has faced financial losses in recent years, a challenge that has concerned potential investors. For the financial year ending March 2024, Swiggy reported:
- A net loss of ₹2,350.24 crore.
- Revenue of ₹11,634.35 crore.
In the first quarter of FY 2024-25, Swiggy posted a net loss of ₹611.01 crore on a revenue of ₹3,310.11 crore. Despite these losses, Swiggy remains optimistic about its future profitability, given its growth in the food and grocery delivery sectors.
How Swiggy Stacks Up Against Zomato
Swiggy’s closest competitor, Zomato, also faced profitability challenges during its IPO but has since turned things around. In contrast to Swiggy, Zomato reported a net profit of ₹351 crore for FY 2024, compared to Swiggy’s loss of over ₹2,300 crore. This difference in profitability is a significant factor for investors to consider.
However, Swiggy was once ahead of Zomato in terms of revenue. At one point, Swiggy’s revenue surpassed that of Zomato, especially in Southern India, where Swiggy holds a stronger foothold. Currently, Swiggy’s revenue stands at ₹11,247 crore, just behind Zomato’s ₹12,000 crore.
Key Financial Metrics:
- Average Order Value (AOV): Both Swiggy and Zomato have an AOV of around ₹428, showing similar pricing dynamics in the food delivery business.
- Monthly Transacting Users: Zomato has more monthly active users than Swiggy, with a gap of approximately 6 million orders.
Quick Commerce: The New Battleground
The race to dominate quick commerce—the ultra-fast delivery of essentials—has become a key focus for Swiggy and Zomato. Swiggy launched Instamart, while Zomato acquired Blinkit to enter this space. Quick commerce has quickly gained traction in India, where 10-minute delivery services have become the norm for groceries, electronics, and other essentials.
Although Swiggy and Blinkit are operating in the same markets, Blinkit leads in revenue, with ₹2,300 crore compared to Instamart’s ₹1,100 crore. Blinkit’s larger order sizes and higher adoption rates in major cities contribute to its lead. However, with only 25 cities currently offering quick commerce services, there’s significant room for both platforms to expand into tier 2 and tier 3 cities across India.
Lessons from Zomato’s IPO
When Zomato went public, it was a loss-making company, and investors were skeptical. Yet, over time, Zomato has transformed into a profitable enterprise, proving that companies in the food delivery space can turn things around. Zomato’s share price doubled shortly after its IPO, reaching ₹144 from its issue price of ₹76, before dipping again.
This experience provides valuable insights for Swiggy. While Swiggy currently faces significant losses, it may follow Zomato’s path toward profitability, leveraging its strong brand, infrastructure, and user base.
Should You Invest in the Swiggy IPO?
Swiggy’s IPO has generated substantial interest from both institutional and retail investors. Large investors such as Norges Wealth Fund and Fidelity have already placed bids totaling $15 billion, which is 25 times the $605 million portion reserved for institutional investors.
For retail investors, the key question is whether Swiggy can replicate Zomato’s success. While Swiggy’s financials show consistent losses, its market presence and potential for growth—especially in quick commerce—make it an intriguing investment.
Conclusion
Swiggy’s upcoming IPO is a landmark event, with the company aiming to raise over ₹11,000 crore. As the food and grocery delivery industry continues to evolve, Swiggy is positioning itself for growth in both established and emerging markets. However, potential investors should weigh the company’s current financial performance against its long-term potential before making their investment decisions.