1 week ago
Shares of Swiggy Ltd. listed at a premium of nearly 8% on Wednesday, November 13. The stock debuted at ₹420 on NSE, up 7.69%, while on BSE, it debuted a premium of 5.6%, at ₹412, over its initial public offer (IPO) price of ₹390.
Post listing, the stock hit an intraday high of ₹449 per share on the BSE, surging 15%. Swiggy's market capitalisation crossed the ₹1 lakh crore mark intraday.
The issue had a price band of ₹371-390 per share.
The grey market premium (GMP) for Swiggy's IPO has turned flat on the day of listing. Earlier on Tuesday, the unlisted shares of the Softbank-backed company were commanding with a grey market premium of ₹2.
Analysts had expected a subdued listing, saying the sentiment is likely influenced by the company's continued losses, despite steady revenue growth.
Considering the low subscription demand from NII's and retail investors, along with current market sentiment, Prashanth Tapse of Mehta Equities believed there is a high possibility of a flat to negative listing. He said that the majority of investors, especially NIIs and retail investors, stayed back for several reasons, including the negative cash flow business model, concerns about high competition, and the ongoing negative market sentiment.
"For allotted investors, one should not expect any kind of listing gains. Hence, only risky investors should consider the company to hold for long term despite knowing short term volatility and competitive pressures in the sector. For non-allottees, we advise to wait and watch for the price to settle and revisit the space with better discounted opportunity," Tapse had said.
Shivani Nyati of Swastika Investmart had said that the IPO's valuation, while appearing reasonable based on certain metrics, presents a challenge due to its negative earnings.
Additionally, the current volatile market conditions is also expected to further impact the listing performance.
"Investors with a high-risk tolerance and a long-term perspective may consider the IPO, but it's essential to acknowledge the potential risks associated with the company's current financial position and the broader market uncertainties," Nyati had said.
Swiggy IPO subscription status
The IPO of Swiggy saw decent interest from investors, with the issue receiving 3.59 times subscription at close. The retail category was booked 1.14 times, qualified institutional buyer at 6.02 times, and the non-institutional investor category at 0.41 times.
The issue was open for public bidding between November 6 and November 8.
The ₹11,327 crore IPO included a fresh issue of 11.54 crore shares aggregating to ₹4,499 crore, while existing shareholders offloaded 17.5 crore shares aggregating to ₹6,828 crore.
At the upper price band, the online food delivery platform is expected to have a post-listing market capitalisation of ₹87,299 crore.
Swiggy IPO objective
The company will use ₹1,343.5 crore out of net fresh issue proceeds for investment in its subsidiary Scootsy, and ₹703 crore for investment in technology and cloud infrastructure. Furthermore, ₹1,115 crore will be spent on brand marketing and business promotion expenses, with the remainder allocated for inorganic growth and general corporate purposes.
Business overview
Founded in 2014, Swiggy partners more than 200,000 restaurants across India to deliver food in the world’s most populous nation, as per its website. Its rivals include Zomato Ltd., e-commerce giant Amazon.com Inc.’s India unit and conglomerate Tata Group’s BigBasket in the country’s fast-growing quick commerce sector.
Swiggy primarily operates in a B2C marketplace platform where it aggregate restaurant & merchant partners that can list their food & products, while users can discover and purchase such items. The company facilitates the fulfilment of these orders through enabling delivery, reservations, payments, and lead generation for partners.
Financials
Swiggy posted a net loss of ₹611.101 crore, and a revenue of ₹3,310.11 crore for the June 2024 quarter. The company reported a net loss of ₹2,350.24 crore and a revenue of ₹11,634.35 crore for the financial year ended on March 31, 2024.
