Swiggy IPO Highlights: Issue got subscribed 12% on Day 01

According to a recent circular, Swiggy has allocated 13.04 crore shares to 151 anchor investors at a price of Rs 390 per share, totaling Rs 5,085 crore. Out of these, 5.3 crore shares were allocated to 19 domestic mutual funds, spread across 69 investment schemes.

Key participants in the anchor allocation included ICICI Prudential Mutual Fund, SBI Mutual Fund, HDFC Life Insurance Company Ltd, SBI Life Insurance Co. Ltd, and ICICI Prudential Life Insurance Company Ltd. This strong anchor participation sets a robust foundation as Swiggy heads into its public offering.

Swiggy’s IPO, structured as a book-built issue, is set to raise Rs 11,327.43 crore in total. This includes a fresh issue of 11.54 crore shares, aimed at generating Rs 4,499 crore, alongside an offer for sale of 17.51 crore shares, amounting to Rs 6,828.43 crore.

Swiggy’s IPO saw a modest 7% subscription on its first day of bidding as of 12:15 pm on November 6. The food delivery and quick-commerce company received bids for 1.08 crore shares against the 16 crore shares available, based on data from the NSE.

Retail individual investors led the charge, with a 32% subscription rate, while the non-institutional investors’ category saw a 3% subscription. The IPO, aimed at raising substantial capital for Swiggy’s growth initiatives, will remain open for further bids in the coming days.

“At higher price band, Swiggy is demanding an EV/Sales multiple of 7.3x, which is at discount to its only listed peer i.e. Zomato. Despite

reporting robust growth during the reported period, currently its operations are loss making at EBIT level. Despite the company management guiding profitable operation in future, we are cautiously optimistic on the future performance. Thus, considering the future growth potential in the quick-commerce and supply-chain distribution market and the duopoly market structure, we are assigning a “Subscribe for Long Term” rating for the issue,” said Choice Broking in an IPO note.

The company riased a total of Rs 5,085.02 crore from anchor investors. Swiggy sold 130.38 million shares to anchor investors on November 05. A bit more than 150 anchor investors participated in the anchor placement.

“With low cash burn, it is well positioned and funded to fight out with existing as well as any new entrants into this attractive space. Like its rival in its initial day’s food delivery operator is yet to turn profitable, but shows steady revenues and is scaling up its quick commerce vertical amid intense competition. On Valuation parse, at the upper price band the company’s implied market cap is around Rs 87,298 crore value at price-to- sales of 7.8 times of its FY24 financials on post issue which appears to be fairly priced,” said Anand Rathi Research in an IPO note.

The issue was subscribed 0.05 times as of 1111 IST on November 06, 2024. The IPO received bids worth Rs 303 crore. The retail investors booked the issue 0.23 times bidding for worth Rs 263 crore. The NIIs subscribed to the issue 0.02 times

“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,” said Geojit Financial Services in a research report.

The shares of Swiggy were commanding a premium of 3% in the grey market, indicating a lacklustre listing. The grey market is an unofficial place where shares trade illegally ahead of listing.

“Swiggy operates in an 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 the long term’. At the upper price band of Rs 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,” said Motilal Oswal in an IPO note.

“We believe Swiggy Ltd IPO brings investors an opportunity to invest in a new age growing consumer-first technology company offering an easy-to-use convenience platform. We think the company’s continuous expansion in hyperlocal commerce, evident through its increased dark store footprint and faster delivery times, reinforces its leadership in convenience and service quality. We also believe with notable improvements in Average Order Value (AOV) and contribution margin—from -7.5% to -3.18% in just a year Swiggy demonstrates both operational efficiency and financial resilience,” said Rajan Shinde, Research Analyst at Mehta Equities. The company’s high-frequency user engagement, rising partner retention and a broad selection of offerings have created a sticky user base that drives sustained growth. By looking at the financials, the company achieved impressive revenue growth, increasing by 44.9% in FY23 and 36.1% in FY24, while also reducing its losses from Rs 4,179.31 crore in FY23 to Rs 2,350.24 crore in FY24.

The company earns revenue from commissions from restaurant & merchant partners, advertising revenue, fees from customers & delivery partners & subscription revenue from Swiggy One. The food delivery business is the most scaled with a presence across 681

cities in India.

Swiggy shares are scheduled for listing on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on Wednesday, November 13. The share allotment is expected to be finalized by November 12, one day prior to the listing.

Market observers indicate that Swiggy’s unlisted shares are currently trading at a grey market premium (GMP) of Rs 19 above the issue price. This premium implies that the grey market is expecting a listing gain of around 4.87% from the upcoming public issue.

Swiggy has set the price band for its IPO between Rs 371 and Rs 390 per share, with a lot size of 38 shares. Retail investors must apply for a minimum of one lot, comprising 38 shares, or in multiples of 38 shares. This structure enables investors to participate in the IPO within the specified price range.

The Swiggy IPO is scheduled to open for public subscription on Wednesday, November 6, and will close on Friday, November 8.

Swiggy’s IPO, a book-built issue, totals Rs 11,327.43 crore. This includes a fresh issue of 11.54 crore shares, amounting to Rs 4,499 crore, and an offer for sale of 17.51 crore shares, totaling Rs 6,828.43 crore.

Swiggy Limited reported a 34% increase in revenue and a 44% rise in profit after tax (PAT) from the financial year ending March 31, 2023, to March 31, 2024.

The price band for the Swiggy IPO is set at Rs 371 to Rs 390 per share. Retail investors must apply for a minimum lot size of 38 shares, requiring a minimum investment of Rs 14,820. For small and new institutional investors (sNII), the minimum lot size is 14 lots (532 shares), which amounts to Rs 207,480. For big new institutional investors (bNII), the minimum lot size is 68 lots (2,584 shares), totaling Rs 1,007,760.

If you have been allotted shares, they will be credited to your Demat account.

DRChoksey FinServ Pvt Ltd has issued an “Apply” recommendation for the Swiggy IPO. Meanwhile, Dilip Davda, SBICAP Securities Limited, and Swastika Investmart Ltd have suggested a “May Apply” stance. Capital Market has taken a “Neutral” position regarding the IPO.

Founded in 2014, Swiggy Limited offers users a comprehensive platform accessible through a single app for seamless food delivery, grocery shopping, and household goods ordering. Users can easily search, select, order, and pay for items while benefiting from a network of on-demand delivery partners.

Swiggy operates five key business units:

The Swiggy platform also supports restaurant reservations through Dineout, event bookings via SteppinOut, and product pickups/deliveries with Swiggy Genie, alongside other hyperlocal commerce activities offered through Swiggy Minis. Additionally, the company features a membership program called “Swiggy One,” providing exclusive discounts and offers, as well as in-app payment solutions such as the digital wallet “Swiggy Money” (a prepaid payment instrument), “Swiggy UPI,” and a credit card in collaboration with HDFC Bank for extra benefits.

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Kotak Mahindra Capital Company Limited, Citigroup Global Markets India Private Limited, Jefferies India Private Limited, Avendus Capital Pvt Ltd, J.P. Morgan India Private Limited, BofA Securities India Limited, and ICICI Securities Limited have been appointed as the book running lead managers for the Swiggy IPO. Link Intime India Private Ltd will serve as the registrar for the issue.

Investors can place bids starting with a minimum of 38 shares, with additional bids required in multiples of this amount. The table below outlines the minimum and maximum investment limits for retail investors and high-net-worth individuals (HNIs) in terms of shares and investment amounts.

Investors can anticipate the allotment status of the Swiggy IPO to be released on November 11, 2024.

As of November 5, 2024, at 03:29 PM, Swiggy’s last gray market premium (GMP) stands at Rs 12. Given the price band of Rs 390.00, the estimated listing price for Swiggy IPO is projected at Rs 402, which includes today’s GMP. This translates to an expected percentage gain of 3.08% per share.

Swiggy’s IPO price band is set at Rs 371 to Rs 390 per share, with a minimum application lot size of 38 shares. Retail investors need a minimum investment of Rs 14,820. For small Non-Institutional Investors (sNII), the minimum investment is 14 lots, or 532 shares, amounting to Rs 2,07,480. For large Non-Institutional Investors (bNII), the minimum is 68 lots, or 2,584 shares, totaling Rs 10,07,760.

Swiggy’s initial public offering (IPO) is officially open for subscription today, November 6, 2024, and will close on November 8, 2024. The allotment for the Swiggy IPO is anticipated to be finalized on Monday, November 11, 2024. Once allotted, the shares are set to list on the BSE and NSE, with a tentative listing date scheduled for Wednesday, November 13, 2024.

Swiggy’s IPO, totaling Rs 11,327.43 crores, includes a fresh issue of 11.54 crore shares worth Rs 4,499 crores and an offer for sale of 17.51 crore shares amounting to Rs 6,828.43 crores.

“Swiggy, at the upper price band of Rs 390, is valued at Price/Sales, EV/Sales and P/BV multiple of 7.8x/7.3x/7.1x respectively of its FY24 financials on post-issue capital. While comparing with Zomato, the issue appears to be fairly priced on all these parameters. We recommend investors to subscribe to the issue for a long-term investment perspective,” said SBI Securities in an IPO note.