Food delivery major Swiggy to debut on stock market on Wednesday

If the grey market premium is any indication, Swiggy's shares could list close to its issue price of Rs 390 per share, valuing the company at Rs 87,300 crore

Shares of food delivery major Swiggy will make stock market debut on Wednesday following its Rs 11,327 crore initial public offering (IPO), second biggest this year and sixth-largest to hit the domestic market.

 

 

The IPO’s main book had garnered 3.6 times subscription, with 90 per cent of the bids coming from institutional investors.

 

Swiggy’s listing comes at a time when the domestic markets are under intense selling pressure on account of earnings disappointment and sharp selloff by overseas funds.

 

If grey market premium is to go by, Swiggy’s shares could list close to its issue price of Rs 390 per share, which values the company at Rs 87,300 crore.

 

 

Swiggy’s rival Zomato is currently valued at Rs 2.31 trillion -- making it the 38th most valuable company in the country. It had come with a Rs 9,375-crore IPO in July 2021, where new shares worth Rs 9,000 crore were issued at Rs 76 apiece. Shares of Zomato last closed at Rs 261.

 

A recent note by Macquarie said Swiggy is 4-6 quarters behind Zomato in food delivery and quick commerce.

 

“Swiggy’s gross order value (GOV) of $3.3 billion (FY25 annualised) is about 25 per cent below leader Zomato. Swiggy’s monthly transacting users (14 million) lag Zomato (20 million), while order frequency is in-line and average order value is slightly higher. Swiggy’s contribution margin is about 100 basis points behind Zomato due to higher discounts,” the note highlighted.

 

Through the IPO, Swiggy has raised fresh capital to the tune of Rs 4,499 crore. It will use this proceeds for expansion of dark store network, investment in technology and cloud infrastructure, brand marketing and business promotion and funding inorganic growth.

 

The IPO also comprised Rs 6,828 crore secondary share sale by 10 investors, which includes Tencent, Accel India and Apoletto Asia. The acquisition cost for the selling shareholders ranges between Rs 11.2 and Rs 165.5 per share.

 

In FY24, Swiggy’s loss had narrowed to Rs 2,350 crore from Rs 4,179 crore in FY23. Its revenues from operations stood at Rs 11,247 crore in FY24, up from Rs 8,265 crore in FY23.

 

On a price/sales, enterprise value/sales and price-to-book value basis, Swiggy is valued at 7.8x, 7.3x and 7.1x respectively of its FY24 financials on post issue basis.