Zomato share price falls 4% after Swiggy files IPO DRHP with Sebi

Swiggy's IPO move had investors buzzing about the competitive landscape in the food delivery market as Zomato's scrip slipped up to 3.64 per cent to an intraday low of Rs 273.50 per share.

Zomato share price: Zomato's share price drew attention on Friday, September 27 as rival Swiggy submitted its Initial Public Offering (IPO) Draft Red Herring Prospectus (DRHP) to the Securities and Exchange Board of India (Sebi) late on September 26.

The move had investors buzzing about the competitive landscape in the food delivery market as Zomato’s scrip slipped up to 3.64 per cent to an intraday low of Rs 273.50 per share.

However, Zomato shares managed to bounce back from the day’s low and were trading about 0.8 per cent lower at Rs 281.6 apiece. In comparison, BSE Sensex was trading 0.26 per cent lower at 85,611.41 levels.

 

That said, here’s a look at Swiggy IPO details:

Swiggy IPO includes a fresh issue of shares worth up to Rs 3,750 crore, along with an offer for sale (OFS) where shareholders will sell up to 185,286,265 equity shares.

Key shareholders participating in the OFS include Accel India IV (Mauritius), Apoletto Asia, Alpha Wave Ventures, Inspired Elite Investments, Tencent Cloud Europe, and MIH India Food Holdings, among others.

According to the DRHP, the IPO proceeds will fund investments in its subsidiary Scootsy, the expansion of its dark store network for quick commerce, technology enhancements, and inorganic growth initiatives.

Swiggy financials

Swiggy reported impressive financials for FY24, with consolidated operating revenue reaching Rs 11,247.4 crore—up 36 per cent year-on-year (Y-o-Y). Notably, Swiggy's losses halved from Rs 4,192 crore in FY23 to Rs 2,256 crore in FY24.

In Q1FY25, Swiggy's consolidated B2C gross order value (GOV) hit Rs 10,189.5 crore, reflecting strong demand.

Instamart is rapidly expanding its presence, having opened 59 new dark stores in Q1FY25 alone. The GOV for Instamart surged to Rs 8,068.5 crore for FY24, marking a solid 57.6 per cent growth year-on-year. In Q1FY25, GOV stood at Rs 2,724 crore. This translates to an annualised GOV of $1.3 billion, already accounting for 40 per cent of the food delivery segment.

How did Zomato fare in the FY gone by?

For the entire FY24, Zomato reported an adjusted revenue of Rs 13,545 crore, marking a 23 per cent increase from FY23, with an adjusted Ebitda of Rs 372 crore.

Meanwhile, the food aggregator reported a net profit of Rs 253 crore in Q1FY25, a sharp increase from just Rs 2 crore in Q1FY24.

Zomato's revenue from operations soared 74 per cent year-on-year (Y-o-Y) to Rs 4,206 crore in Q1FY25, as compared to Rs 3,562 crore in the preceding quarter, which was a 19.2 per cent increase.

The company’s growth was largely fueled by its quick commerce business, Blinkit, which saw its gross order value (GOV) and revenue increase over 22 per cent quarter-on-quarter (Q-o-Q), outpacing the food delivery segment, which grew over 10 per cent in both metrics.

Overall, Zomato's GOV across its business-to-consumer (B2C) verticals—food delivery, quick commerce, and dining out—grew 53 per cent year-on-year, totaling Rs 15,455 crore.

Swiggy vs Zomato: The better bet? Brokerage view

From a technical standpoint, Zomato’s food segment is currently trading at a forward EV/Ebitda multiple of 53x for one year, while its quick-commerce segment is at 5.5x one-year forward EV/sales, analysts at Elara Capital said in a note from September 13.

They said that Swiggy might trade at a discount to Zomato's valuation due to several factors: 1) Zomato's scale, which features 27 per cent higher revenue in food delivery and 109 per cent higher revenue in quick-commerce compared to Swiggy, 2) Zomato's robust growth rates of 55 per cent in FY24 and a 93 per cent higher GOV in quick-commerce, 3) Blinkit's market leadership in the quick-commerce sector, and 4) Zomato's superior profitability in food delivery and break-even status in quick-commerce.

While Swiggy could narrow the valuation gap with Zomato through sustainable market share growth (in line with industry averages) and improved profitability, analysts believe achieving parity or a premium valuation will require Swiggy to enhance its market share in both food delivery and quick-commerce.