Swiggy, one of India’s top food delivery platforms, has officially launched its initial public offering (IPO). The IPO, which aims to raise a substantial sum for expansion and technological innovation, is open for subscription until November 8. With a price band set between ₹371 and ₹390 per share, Swiggy’s IPO has already created a buzz in the market. But is it worth investing in? Here’s a breakdown of what the offering entails and analysts’ perspectives on Swiggy’s growth potential.
Swiggy IPO Key Highlights
- IPO Structure and Purpose
Swiggy’s IPO consists of a fresh issue of ₹4,500 crore and an offer for sale (OFS) by existing shareholders, bringing the total offer size to ₹11,324 crore. The fresh issue is intended to fund debt repayment, technological upgrades, expansion of dark stores, and marketing efforts to drive growth. - Price Band and Grey Market Premium (GMP)
The price range is ₹371 to ₹390 per share, with each lot containing a minimum of 38 shares. In the grey market, Swiggy shares are currently trading at a ₹12 premium, reflecting investor interest. However, the premium suggests a modest 3% above the issue price, indicating cautious optimism from investors.
Should You Subscribe? Analyst Opinions
Market analysts have mixed opinions on Swiggy’s IPO. While the company’s growth in the quick commerce segment has fueled excitement, its financials and competition with profitable peers like Zomato are potential deterrents for some investors.
- Positive Outlook: Analysts from SBI Securities suggest that Swiggy’s valuation is reasonable compared to industry standards, especially with its revenue growth of 40% CAGR over three years. They recommend a “subscribe” rating for long-term investors, emphasizing Swiggy’s potential to expand within India’s growing food delivery and quick commerce sectors.
- Cautious Approach: Conversely, Samco Securities has advised caution, pointing to Swiggy’s ongoing financial losses. They suggest that while Swiggy has a robust customer base and brand, investors may need to wait until Swiggy demonstrates a clearer path to profitability.
Swiggy’s Financial Performance and Growth Strategy
Swiggy has witnessed substantial growth since its inception in 2014, with recent diversification into quick commerce through Instamart. As of June 2024, Swiggy reported serving 15.9 million monthly active users and operates over 557 dark stores. Despite this, Swiggy remains unprofitable, with net losses of ₹2,350 crore in FY24, though a notable improvement from ₹3,629 crore in FY22.
| Key Metrics | FY24 | Comparison |
|---|---|---|
| Revenue Growth | 40% CAGR over 3 years | Positive |
| Net Losses | ₹2,350 crore | Improved from FY22 |
Swiggy’s growth strategy includes leveraging its brand, expanding into new cities, and increasing customer retention through cross-selling services. However, competition from Zomato and other quick commerce entrants could challenge its market share.
Disclaimer: This article provides information on Swiggy’s IPO based on available data and analyst insights. Investors are advised to conduct their own research before investing.
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