Swiggy Sets IPO Price Band at Rs 371-390 Per Share; Subscription Opens November 6th

With India’s food delivery sector growing rapidly, Swiggy is preparing to go public on the Indian stock exchanges. Three years after competitor Zomato's successful IPO raised Rs 9,375 crore, Swiggy has announced its IPO subscription window, which will open on November 6 and close on November 8, 2024.

Swiggy IPO price band 2024

Swiggy aims to raise Rs 11,327.43 crore from this listing, with a price band set between Rs 371 and Rs 390 per share. With this, Swiggy is targeting a valuation of $11.3 billion, reflecting a 25% reduction from its earlier goal of $15 billion.

The IPO consists of a fresh issue of Rs 4,499 crore, while the remaining Rs 6,828.43 crore will be sourced through an offer-for-sale (OFS), which includes a 5.2% stake offloaded by investors such as Prosus, potentially generating $510 million in proceeds. Accel is also expected to participate in the OFS with an estimated stake sale of $60 million, while Elevation Capital and Tencent could each secure $30-35 million.

Additionally, Swiggy co-founders Sriharsha Majety and Nandan Reddy, holding stakes of 6.23% and 1.76%, respectively, are likely to sell a combined 0.1% of their shares, expected to yield around $14 million in total. Notably, Swiggy does not have any identifiable promoters, adhering to SEBI ICDR Regulations and the Companies Act, 2013.

Swiggy IPO Timeline and Listing

Swiggy’s IPO will close on November 8, with shares expected to list on November 13, 2024, in what will be a milestone for the food and grocery delivery sector in India. The upcoming IPO aims to expand Swiggy’s operations and bolster its market presence amid increasing competition with rivals like Zomato, which currently leads in monthly transacting users and pan-India market share.

Allocation of Swiggy IPO Funds and Strategic Focus

Fund Utilization for Debt Repayment and Dark Store Network

Swiggy plans to allocate Rs 1,648 million of the raised funds to repay debts, primarily for borrowings by its subsidiary, Scootsy. Initially acquired in 2018 for Rs 50 crore, Scootsy operated independently, providing premium food delivery services from high-end restaurants. However, after falling short of projected growth, Swiggy discontinued Scootsy in 2020.

Now, according to its RHP (red herring prospectus), Swiggy intends to reinvest in Scootsy, focusing on expanding its dark store network to strengthen its infrastructure and fund lease and license payments.

Investment in Instamart’s Quick Commerce Expansion

An additional Rs 11,787 million will support Instamart, Swiggy’s fast-growing quick-commerce wing. This investment aims to grow its dark store network, an essential component of rapid delivery services.

Enhancing Swiggy’s Brand Visibility and Marketing

Swiggy has allocated Rs 11,153 million from the IPO for marketing efforts, brand-building, and increased consumer outreach, crucial for sustaining growth and competing with Zomato's significant lead.

Swiggy’s Financials and Competitive Position

Focus on Reducing Operational Losses

Swiggy has been operating at a loss since its inception in 2014. However, annual losses as a percentage of revenue have decreased substantially. While in 2022 losses accounted for 63.61% of Swiggy’s revenue, they fell to 20.9% in 2024, with the quarter ending June 30, 2024, showing a further reduction to 18.96%.

Challenges with Scootsy’s Dark Store Expansion

Scootsy is yet to receive necessary approvals and registrations for each new dark store location. The subsidiary’s recent losses have only increased, from Rs 2,953.5 million in the last few years to Rs 4,239.72 million in FY24, posing ongoing challenges for Swiggy’s overall profitability.

Competitive Edge with Market Share Comparison

Swiggy currently holds a 43% market share compared to Zomato’s 57%, according to FY24 figures. With 12.7 million monthly transacting users (MTUs), Swiggy trails behind Zomato’s 18.4 million MTUs, underlining the competitive dynamics in India's food delivery landscape.

New Regulatory Landscape and Industry Prospects

With the listing, Swiggy will enter the public domain, making it subject to more stringent regulatory scrutiny. However, the IPO also marks a pivotal moment for the food delivery industry, underscoring the sector’s resilience and growth potential despite recent losses and operational challenges.