Swiggy IPO 2024 Highlights: Investors look forward to allotment and listing as IPO gets fully subscribed

The Swiggy IPO was oversubscribed by 3.59 times. The retail investors saw 1.11 times of susbcription, the qualified institutional investors category saw 6.02 times subscription. The Non-Institutional Investors category was subscribed by 0.41 times.

“As of June 30, 2024, Swiggy reached 112.73 Mn users, demonstrating robust growth supported by a unified app experience that simplifies diverse service offerings. The expansion of dark stores coupled with the introduction of non-grocery categories, aims to boost basket sizes and fulfill increasing consumer demand. Swiggy’s customer-

centric approach, characterized by high transaction frequency and a personalized user experience, ensures strong retention rates and a widening gap in Monthly GOV (Gross order value) per MTU (Monthly Transacting Users),” said Deven Choksey Research in an IPO note.

Swiggy, a consumer-focused technology company established in 2013, operates a convenient, user-friendly platform accessible through a unified app. The platform facilitates browsing, selection, ordering, and payment for a variety of products and services, including food delivery, grocery and household items, restaurant reservation, event booking, and hyperlocal commerce activity.

“We believe Swiggy has been more efficient in customer acquisition than its competitor Zomato, driven by its unified app model, which enhances cost efficiency and supports user growth. The company’s expansion into Tier 2 and Tier 3 cities, along with its inclusion of groceries and medicines, bolsters its path to profitability. Given its consistent innovation and strategic expansion, we believe Swiggy’s is well-positioned for sustained growth. Making it a compelling opportunity for investors seeking exposure in the evolving hyperlocal commerce space. Hence, by looking at all attributes we recommend investors to “Subscribe” the Swiggy Ltd for long term perspective,” said Rajan Shinde, Research Analyst at Mehta Equities.

Kotak Mahindra Capital Company, Citigroup Global Markets India, Jefferies India, Avendus Capital, J.P. Morgan India, Bofa Securities India, and ICICI Securities are the book running lead managers of the Swiggy IPO.

Shares of Swiggy were commanding a premium of 0.5% in the grey market over its issue price. This indicates a muted listing for the stock on the bourses. The company’s listing is due on November 13. The grey market is an unofficial place where shares trade illegally ahead of listing.

Swiggy IPO got subscribed fully on Day 03 i.e. November 08. The issue received bids for 170.60 million shares against the offered 160.11 million shares. The retail investors booked the issue 0.97 times as of 1258 IST on November 08. The QIBS booked the issue 1.52 times and NIIs 0.22 times. While employee segment was susbcribed 1.37 times.

“The company is the most valuable brand in the Consumer Technology & Services Platforms category and is among the Top 25 most valuable brands in India overall (Source: Kantar BrandZ Most Valuable Indian Brands Report 2024). Swiggy is the only unified app in India that fulfils all food-related missions of urban users (ordering-in, eating-out and cooking- at-home) through its own platform. Swiggy also captures the largest share of consumer wallet in terms of Monthly GOV per MTU (page-213 of RHP) in the hyperlocal commerce use-cases as of Jun’24,” said SBI Capital Securities in an IPO note.

Swiggy shares have shown a muted trend in the unlisted market on the final day of the IPO subscription process. According to market observers, the grey market premium (GMP) for Swiggy shares is Rs 2 per share, indicating a slight premium of 0.51% over the IPO price of Rs 390 per share.

Swiggy primarily operates in a B2C marketplace platform where it aggregates restaurant & merchant partners that can list their food & products, while users can discover and purchase such items which facilitates the fulfilment of these orders through enabling delivery, reservations, payments, and lead generation for partners.

As of November 8, the final day of bidding, Swiggy’s IPO has been subscribed 39%, receiving bids for 6.27 crore shares out of the 16.02 crore on offer, per NSE data. The retail investor portion reached 89% subscription, while non-institutional investors subscribed 15%. Qualified institutional buyers (QIBs) booked 34%, and the employee portion was oversubscribed at 1.21 times.

“We recommend subscribing to the IPO as favourable scale and long-term opportunities in quick commerce provide growth runaway while the food delivery vertical has the potential to improve the margin and cash flow going ahead,” said InCred Equities in a research note.

Swiggy will use the proceeds from its IPO for several strategic purposes, including funding investments in its material subsidiary, Scootsy. The company plans to upgrade its technology and cloud infrastructure and invest in brand marketing to enhance awareness and visibility in different segments. Additionally, Swiggy intends to support inorganic growth through potential acquisitions and cover general corporate expenses.

Motilal Oswal Financial Services has recommended that only high-risk investors ‘Subscribe for the long term’ to Swiggy’s IPO. The brokerage noted that Swiggy operates in a nascent oligopoly market with significant growth opportunities, especially with its innovative 10-minute food delivery offering. However, given the company’s ongoing losses and delayed profitability, Motilal Oswal advised caution. At the upper price band of Rs 390, the issue is priced at 7.8x FY24 Market Cap to Sales, which is considered reasonably priced compared to Zomato, trading at 17.5x.

The Swiggy IPO saw strong demand from retail individual investors (RIIs), with their quota subscribed 84%. The non-institutional investors portion was subscribed 14%, while qualified institutional buyers (QIBs) bid for 28% of their reserved shares. The employees’ portion was subscribed 1.15 times. Prior to the public offer, the Bengaluru-based company raised Rs 5,085 crore from anchor investors.

Swiggy’s IPO was subscribed 35% on the second day of its share sale on November 7. The food delivery and quick-commerce major received bids for 5.56 crore shares out of the 16 crore shares on offer, as per data from the NSE.

The Capital Market (CapitalMarket.com) has assigned a rating of 42 to Swiggy’s IPO. Their analysis suggests avoiding the IPO, although it may be suitable for active risk seekers.

Swiggy Limited saw a 34% increase in revenue and a 44% rise in profit after tax (PAT) between FY 2023 and FY 2024. As of June 30, 2024, its assets stood at Rs 10,341.24 crore, with revenue at Rs 3,310.11 crore. The company reported a PAT loss of Rs 611.01 crore, an improvement from the previous year’s loss. Its net worth decreased to Rs 7,444.99 crore, while reserves and surplus remained negative at -Rs 7,750.85 crore. Total borrowings were Rs 256.61 crore.

Founded in 2014, Swiggy Limited offers a user-friendly app that enables customers to easily search, select, order, and pay for food (Food Delivery) as well as grocery and household items (Instamart), with on-demand delivery straight to their doorsteps via Swiggy’s partner network. Swiggy operates through five main business units:

– Food Delivery: Convenient ordering and delivery of meals from a range of restaurants.

– Out-of-Home Consumption: Experiences such as dining out and event-related food services.

– Quick Commerce: On-demand delivery of groceries and household essentials.

– Supply Chain & Distribution: B2B solutions including deliveries, warehousing, and logistics for wholesalers and retailers.

– Platform Innovation: New services and offerings, including Swiggy Genie for personal deliveries and Swiggy Minis for smaller, curated orders.

Swiggy IPO to Offer 290.5 Million Shares: 28.97 Million for Retail Investors, 86.92 Million for Qualified Institutional Buyers, and 43.46 Million for Non-Institutional Investors

Swiggy’s IPO saw 35% subscription by the end of day two, with retail investors showing strong interest at 84% subscription. The Qualified Institutional Buyers’ portion was subscribed at 28%, and non-institutional investors’ portion at 14%.

Ahead of the IPO, Swiggy secured Rs 5,085 crore from anchor investors. The IPO is open in the price range of Rs 371-390, with the company aiming to raise a total of Rs 11,327 crore.

With an upper price band valuation of approximately USD 11.3 billion (about Rs 95,000 crore), Swiggy’s IPO is expected to help the company bolster its tech infrastructure, brand marketing, and expand growth avenues.

Swiggy remains positive about its growth in quick commerce despite the potential entry of new competitors like Jio. CEO Rohit Kapoor emphasizes that success in the industry requires more than just capital.

Swiggy has launched a Rs 11,327 crore IPO, with shares priced between Rs 371 and Rs 390 each. The funds will support technology, marketing, debt repayment, and growth initiatives.

“Swiggy operates in a oligopoly market which is at a nascent stage, thus providing enough opportunities for players to create their niche. Swiggy’s innovation DNA is key to success and it could again be at the forefront through its new 10-minute food delivery offering. However, given that the company is still loss making at an aggregate level, and overall profitability may be some time away, we recommend only High Risk investors to ‘Subscribe for long term’. At the upper price band of ₹390, the issue is priced at 7.8x FY24 Market Cap to Sales and looks reasonably priced compared to Zomato which is trading at 17.5x. “

The Swiggy IPO 2024 is scheduled to open from November 6, 2024, to November 8, 2024. The face value of each share is Rs 1, with a price band set between Rs 371 and Rs 390 per share. The lot size for the IPO is 38 shares. The total issue size amounts to 290,446,837 shares, aggregating up to Rs 11,327.43 crore, which includes a fresh issue of 115,358,974 shares (worth Rs 4,499.00 crore) and an offer for sale of 175,087,863 shares (valued at Rs 6,828.43 crore). Employees will receive a discount of Rs 25 per share. This is a book-built issue IPO, with shares to be listed on the BSE and NSE. The pre-issue shareholding is 2,123,066,748 shares, which will increase to 2,238,425,722 shares post-issue.

“At the upper price band of Rs 390, Swiggy is available at Mcap/sales of 7.8x (on FY24 financials), which appears to be fairly priced. We assign a “Subscribe” rating for the issue on a long-term investment basis, considering its strong brand recall, diversified offerings, integrated app, rapid scaling, consistent innovation, expansion of dark stores, and promising industry outlook.”

The Swiggy IPO is a book-built issue offering worth Rs 11,327.43 crores. It includes a fresh issue of 11.54 crore shares, raising Rs 4,499.00 crores, along with an offer for sale of 17.51 crore shares, totaling Rs 6,828.43 crores.

Swiggy is a new-age, consumer-first technology company offering users an easy-to-use convenience platform, accessible through a unified app-to browse, select, order and pay for food (“Food Delivery”), grocery and household items (“Instamart”), and have their orders delivered to their doorstep through our on-demand

delivery partner network.