Swiggy IPO Day 2 Subscription Status: 24% Booked, Retail Portion Dominates at 74%; GMP Drops

The Swiggy IPO, launched by the food delivery and quick-commerce giant, recorded a 24% subscription rate on the second day of its share sale, which took place on Thursday. According to the latest data from the National Stock Exchange (NSE) until 12:30 pm, a total of 3.83 crore shares were subscribed out of the 16 crore shares available for public offering. This indicates a healthy interest, though there is still some way to go before the issue reaches full subscription. The IPO is open for subscription until November 8, 2024.

Retail Investors Lead IPO Subscription

The retail investor segment, or Retail Individual Investors (RIIs), has shown a strong preference for Swiggy’s IPO, accounting for 74% of the total subscriptions. This suggests that the food delivery company has significant appeal among small investors, with a large proportion of the bids coming from retail participants. On the other hand, subscriptions from non-institutional investors (NIIs) remain relatively low at only 10%, which could indicate more cautious interest from this segment.

Swiggy IPO Raises Rs 5,085 Crore From Anchor Investors

Ahead of the public share sale, Swiggy successfully raised Rs 5,085 crore from anchor investors. These investors, who are typically institutional investors or high-net-worth individuals (HNIs), were allotted shares at the price range of Rs 371-390 per share. The anchor investor segment provides significant support to IPOs and often helps build investor confidence in the upcoming public offering.

Grey Market Premium Indicates Modest Listing Gain

Swiggy's Grey Market Premium (GMP), an informal market where shares are traded before listing, suggests that the company’s stock might experience a modest listing gain. As of the latest reports, the GMP for Swiggy shares is in the range of Rs 6-15, which indicates an expected listing gain of 1-3%. These figures are indicative of a cautious optimism surrounding Swiggy’s market debut, but they suggest that significant returns may not be expected in the immediate term.

IPO Price Band and Subscription Details

The Swiggy IPO is priced between Rs 371 and Rs 390 per share, and it will remain open for public subscription until November 8, 2024. The IPO aims to raise a total of Rs 11,327 crore. This amount is split between a fresh issue of shares worth Rs 4,499 crore and an offer for sale (OFS) amounting to Rs 6,828 crore. The offer for sale allows existing shareholders to divest part of their holdings, while the fresh issue of shares will help the company raise capital for its future growth and expansion plans.

Swiggy’s Valuation and Comparison with Competitor Zomato

At the upper end of the price band, Swiggy’s valuation is estimated to be approximately Rs 95,000 crore. This valuation places Swiggy in a significant position within the food delivery and e-commerce sector, although it is still far behind its primary competitor, Zomato, which went public in July 2021. Zomato currently holds a market capitalization of Rs 2.25 lakh crore, highlighting the vast difference in scale between the two companies. While Swiggy is a leading player in India’s food delivery sector, Zomato has been able to capture a larger share of the market, as reflected in its higher valuation.

IPO Proceeds and Utilization Plans

Swiggy plans to utilize the proceeds from its IPO in several key areas aimed at bolstering its long-term growth prospects. A significant portion of the funds, specifically from the fresh issue of shares, will be directed towards investments in technology and cloud infrastructure. This will help the company strengthen its technological capabilities, enabling more efficient and scalable operations. Additionally, the funds will be allocated for brand marketing and business promotion to enhance Swiggy’s visibility and attract more customers in a competitive market.

Another critical area of focus for the company is debt repayment. A portion of the IPO proceeds will go towards reducing the company’s debt burden, which will strengthen its financial position and make it more attractive to investors. Furthermore, Swiggy plans to use the funds for inorganic growth initiatives, such as acquisitions, which could help the company expand its market share and enter new business segments.

Swiggy’s IPO and Market Sentiment

The Swiggy IPO is being closely watched by investors and market analysts, as it represents one of the most anticipated public offerings in India’s food delivery and e-commerce sector. The IPO’s initial subscription data shows a positive response from retail investors, which could signal strong demand when the stock lists on the exchanges. However, the relatively modest GMP suggests that market sentiment is cautious, and investors are uncertain about the immediate listing gains.

While Swiggy has a strong brand presence in India, it faces significant competition from other food delivery companies like Zomato and new entrants in the market. As the IPO continues to progress, Swiggy’s performance in the stock market will depend on its ability to meet investor expectations and demonstrate its long-term growth potential.

Conclusion

The Swiggy IPO is an important milestone for the company and marks its entry into the public market. The subscription data indicates strong interest from retail investors, while the grey market premium suggests modest listing expectations. The funds raised through the IPO will help Swiggy invest in key growth areas, including technology, debt reduction, and acquisitions. The final success of the IPO will depend on how the company positions itself in the competitive food delivery sector and its ability to execute its growth strategy.