Swiggy Debuts $1.4 Billion IPO on Market

Indian food and grocery delivery company Swiggy expects modest demand from retail investors for its $1.4 billion IPO, even after its expected valuation was cut twice, while domestic stocks have slowed significantly.

The country's second-largest IPO of the year opened for bids on Wednesday, and orders can be taken until November 8. The price range is Rs 371-390.

But while India stood out with several high-profile offerings in Asia this year, Swiggy's IPO comes after a decline in Indian equities in October that is expected to continue through November. The most recent earnings season has been sluggish, and there is a lot of uncertainty surrounding the US presidential election.

Swiggy's grey market premium, the price at which an IPO-bound company's shares are traded in the unregulated market before listing, is only 5% higher than the top end of its price band, said Mahesh Ojha, vice president at Hansex Securities.

"Retail investors' interest in IPOs is going to be low because of the grey market premium, which is mostly seen as investors look for listing gains. Most retail investors who will invest in the issue will do so with a medium to long-term view on returns," Mahesh Ojha said.

Retail investors have been allotted 10% of the offering, while institutional investors hold 75%. The rest goes to non-institutional investors such as corporations and high-net-worth individuals.

Anchor investors, including Fidelity and Norway's sovereign wealth fund Norges, bought shares worth $605 million on Tuesday.

Swiggy has twice cut its valuation by a combined 25% to $11.3 billion, aiming to avoid a "bad" start. Hyundai Motor India's record $3.3 billion IPO last month has not performed well since listing, with its shares falling 5.5%.

Swiggy is second only to Zomato in India's food and grocery market. In food delivery, it has a 34% market share compared to Zomato's 58%, according to brokerage estimates, while in quick commerce, Zomato's Blinkit has an estimated 40-45% and Swiggy's Instamart has a 20-25% share.

Swiggy also has some way to go to match Zomato's financial health, reporting a net loss of Rs 23.5 billion ($280 million) in the year ending March 2024, compared with Zomato's profit of Rs 3.5 billion.