Swiggy, one of India’s largest food delivery and quick-commerce companies, made its much-anticipated stock market debut on November 13, 2024. The shares were listed at ₹420 on the National Stock Exchange (NSE), reflecting a 7.7% premium over the issue price of ₹390.
On the Bombay Stock Exchange (BSE), Swiggy shares opened at ₹412, marking a 5.64% gain from the IPO price. The company’s successful debut signals strong investor interest, driven by Swiggy’s market presence and growth potential in the food delivery and quick-commerce segments.
Swiggy IPO Overview
Swiggy’s Initial Public Offering (IPO) garnered substantial attention, with an oversubscription rate of 3.59 times.
The IPO, valued at ₹11,327.43 crore, was open for subscription between November 6 and November 8, with a price band set between ₹371 and ₹390 per share.
Key IPO Details:
| IPO Metrics | Details |
|---|---|
| Issue Price Range | ₹371 – ₹390 |
| Listing Price (NSE) | ₹420 (up 7.7%) |
| Listing Price (BSE) | ₹412 (up 5.64%) |
| Total IPO Size | ₹11,327.43 crore |
| Oversubscription Rate | 3.59 times |
| Anchor Investor Funds Raised | ₹5,085 crore |
The IPO included a fresh issue of 11.54 crore shares amounting to ₹4,499 crore, while the offer for sale (OFS) consisted of 17.51 crore shares worth ₹6,828.43 crore. Post-listing, the promoter shareholding was reduced to 52.97%, down from 63.56%.
Subscription Breakdown
Swiggy’s IPO witnessed strong demand from institutional investors, while the retail and non-institutional segments showed moderate interest. Here’s a breakdown of the subscription:
| Investor Category | Subscription Rate |
|---|---|
| Qualified Institutional Buyers (QIB) | 6.02 times |
| Non-Institutional Investors (NII) | 0.41 times |
| Retail Investors | 1.14 times |
| Employee Quota | 1.65 times |
The company allocated 75% of the shares to QIBs, 15% to NIIs, and 10% to retail investors. Additionally, 7,50,000 shares were reserved for eligible employees at a discounted rate of ₹25 per share.
Use of Proceeds
Swiggy plans to utilize the net proceeds from the IPO to fuel its growth and expansion initiatives. Key areas of investment include:
- Subsidiary Investment: A portion of the funds will be directed towards Scootsy, a Swiggy-owned quick-commerce brand, to repay certain borrowings and expand its operations.
- Dark Stores Expansion: Swiggy aims to boost its quick-commerce segment by establishing more dark stores, which are dedicated warehouses that streamline inventory and delivery services.
- Technology Enhancement: Investments will be made in technology and cloud infrastructure to support Swiggy’s platform scalability and enhance user experience.
- Brand Marketing: A significant part of the proceeds will go towards marketing and promotional activities to strengthen Swiggy’s brand presence.
- Inorganic Growth: The company has set aside funds for potential acquisitions, targeting strategic growth in complementary business areas.
Brokerage Ratings and Market Outlook
Swiggy’s market debut was met with mixed reactions from brokerage firms. While some highlighted the company’s strong growth potential, others raised concerns about profitability challenges.
Brokerage Ratings Overview:
| Brokerage Firm | Rating | Target Price | Comments |
|---|---|---|---|
| Macquarie | Underperform | ₹325 | Profitability concerns, uneven growth path |
| Motilal Oswal | Subscribe for Long-Term | N/A | Innovation-driven growth potential |
| KR Choksey Finserv | Subscribe | N/A | Focus on user retention and dark store expansion |
| SBI Securities | Subscribe for Long-Term | N/A | Fair pricing compared to peers |
| Arihant Capital Market | Subscribe with Caution | N/A | Aggressive investors advised due to net loss |
Macquarie gave Swiggy an ‘underperform’ rating with a target price of ₹325, citing concerns about profitability. In contrast, Motilal Oswal and KR Choksey were more optimistic, recommending a ‘subscribe’ rating based on Swiggy’s innovative growth strategy.
Company Profile
Founded in 2014, Swiggy is a leading player in the food delivery and quick-commerce industry in India. The company operates an extensive delivery network, offering a wide range of services through a single app.
Swiggy’s Instamart service caters to grocery and household needs, supported by a network of over 600 dark stores across 43 cities as of September 2024.
Financial Performance
For the quarter ending June 30, 2024, Swiggy reported a net loss of ₹611.10 crore on a revenue of ₹3,310.11 crore. For the fiscal year ending March 31, 2024, the company recorded a total revenue of ₹11,634.35 crore, with a net loss of ₹2,350.24 crore.
Despite the losses, Swiggy’s market capitalization stands at approximately ₹87,300 crore, reflecting strong investor confidence in its growth potential.
Conclusion
Swiggy’s stock market debut has been impressive, but the road to profitability remains uncertain. While the company’s expansion plans and focus on technology enhancement are promising, challenges in achieving consistent profitability could impact its long-term outlook.
Investors should consider Swiggy’s growth potential alongside the risks involved, particularly given its current financial performance.
Disclaimer
The information provided in this article is for educational purposes only and does not constitute financial advice. Investments in IPOs and stocks carry market risks. Please conduct your own research or consult a financial advisor before making any investment decisions.
