Swiggy Share Price IPO Listing 2024 Highlights: Swiggy makes positive debut, closes 10.5% higher

Shares of Swiggy end the first day of trading in the secondary market on a higher note. The stock closed the day 10.42% higher at Rs 464. Swiggy was listed at a premium of 7.7% on the National Stock Exchange.

“We note that Swiggy’s recent execution issues may be a thing of

the past because they were partly attributable to the pressures of going public and/or lack of experience of running a retail business. Untimely leadership changes in QC could have further amplified the issues. A successful IPO and leadership revamp at Instamart could just be the catalyst Swiggy needs for a successful turnaround in its fortune,” said JM Financial Services in a research note.

Swiggy shares rise 6% to Rs 445.35 post listing. The IPO was listed at a premium of 7.7% on the National Stock Exchange. The stock was up in the weak market, Sensex fell 576 points or 0.78% to 78,068.

“For allotted investors, 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 to buy near issue price if we get due to market selloff pressure,” said Prashanth Tapse, Senior Vice President of Research at Mehta Equities.

“Swiggy debuted at Rs 420, marking a listing gain of 7.6%, which outpaced its grey market premium (GMP) estimate of just 0.26%. Retail investors showed modest interest, subscribing only 1.14 times, indicating low confidence. Current market conditions have kept many investors on the sidelines, especially as numerous high-quality companies remain 15-20% below their all-time highs,” said Gaurav Garg, Research Analyst at Lemonn.

“Despite subdued market mood and sluggish response from overall investors, Swiggy listing surprised the market participants. Positive listing and price holding above its issue price of 390 should be seen as strong demand for the company. This shows investors are positive on the space and fear of missing out factor is holding investors not to miss the sector growth story, similar to ZOMATO post listing trend,” said Prashanth Tapse, Senior Vice President of Research at Mehta Equities.

“Long-term investors should await an opportune time to accumulate Swiggy shares. The company’s December quarter performance will be crucial in backing the issue with tangible numbers. A decent financial reporting will validate Swiggy’s potential as a good long-term hold,” said Tarun Singh Founder & MD of Highbrow Securities.

“While on an absolute basis Swiggy offers decent upside, we would prefer Zomato if asked to pick only one due to its superior execution in the past and market leadership across key segments. We, however, suggest that investors play both (preferably with higher weightage for Zomato), as in any case both are likely to be amongst the fastest growing consumption names and could, therefore, outperform the broader market returns,” said JM Financial Services in a research note.

“Swiggy has played a pivotal role in the rapid expansion of India’s hyper local on-demand market. It pioneered the full-stack food delivery model in 2014 and later in the midst of a pandemic introduced the dark storeled quick commerce (QC) model. Even today, it continues to be one of the leading hyperlocal delivery platforms in the country, bettered only by Zomato (BUY, Target Price of Rs 300). Despite having ceded some space to competition, it is one of the fastest growing consumption plays with multiple levers to move towards sustainable margins,” said JM Financial Services. The brokerage initiated coverage on Swiggy with a “Buy” rating with a target price of Rs 470.

Shares of Swiggy slips 5% to Rs 400.15 after listing at a premium of 7.7% on the National Stock Exchange. The company was listed at Rs 420.

Swiggy lists at Rs 420 on the National Stock Exchange, a premium of 7.7% to the issue price of Rs 390. The IPO was opened on November 06 and closed on November 08.

Swiggy augments the value proposition to users through its membership programme called “Swiggy One” providing discounts and offers; in-app payment solutions like digital wallet “Swiggy Money” (a pre-paid payment instrument), “Swiggy UPI”, and Swiggy-HDFC Bank credit card for additional benefits. The company offers comprehensive business enablement solutions to restaurant partners, merchant partners (that sell grocery and household items on its platform) and brand partners including alliance partners.

“Despite being the second-largest e-commerce and food delivery player, it received a sluggish response from overall investors. While on a consolidated basis, the overall subscription figures look good, but Day-3 Qualified Institutional Buyers (QIB) investors supported Swingy ipo helping it to successfully sell out, which looks similar trend to Hyundai Motors IPO,” said Mehta Equities in an IPO note.

“For allotted investors, one should not expect any kind of listing gains. Hence, only risky investors should consider the company to “Hold For Lon 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,” said Prashanth Tapse, Senior Vice President of Research at Mehta Equities.

Swiggy is all set to list on November 13 on the bourses. The latest GMP price indicates a lacklustre debut. The shares of Swiggy are neither fetching a premium nor a discount.

During the Swiggy IPO allotment process, the registrar reviews and separates valid applications from those with technical errors. Applications deemed invalid are rejected, while only valid bids at or above the cut-off price are considered for allotment.

Canara Bank Securities Ltd, DRChoksey FinServ Pvt Ltd, and Indsec Securities have all issued an “Apply” recommendation for the Swiggy IPO. Meanwhile, Dilip Davda, SBICAP Securities Limited, and Swastika Investmart Ltd have provided a “May Apply” suggestion. Capital Market has expressed a “Neutral” stance on the IPO.

Swiggy’s Initial Public Offering (IPO) consists of a total of 290,494,914 equity shares. Out of this, 28,974,491 shares are allocated for retail investors. Meanwhile, qualified institutional buyers (QIBs) will have access to 86,923,475 shares, and non-institutional investors (NIIs) are allotted 43,461,737 shares.

The latest Grey Market Premium (GMP) for Swiggy IPO stands at Rs 0, as of November 12, 2024, at 08:02 PM.

Swiggy’s IPO price band has been set at Rs 390 per share. With no change in the GMP, the estimated listing price remains Rs 390.

Based on the current GMP, the expected percentage gain or loss per share is 0.00%, indicating no anticipated premium or discount upon listing.

On the third and final day, November 8, 2024, the QIB category surged significantly to 6.0 times, indicating strong interest from institutional investors.

By the second day, November 7, 2024, the QIB category saw a jump to 0.28 times. NII subscription increased slightly to 0.14 times, and Retail subscriptions grew to 0.84 times. The Employee category continued to gain momentum, reaching 1.16 times, bringing the total subscription to 0.35 times.

On the first day of Swiggy’s IPO subscription, November 6, 2024, the Qualified Institutional Buyers (QIB) category did not see any subscriptions, standing at 0.00 times. The Non-Institutional Investors (NII) category recorded a modest 0.06 times subscription, while the Retail category received 0.56 times. The Employee category fared better at 0.76 times, leading to a total subscription of 0.12 times.

Swiggy operates in 5 segments namely i) food delivery-present in 681 cities; ii) Out-of-home consumption, covering dining out and events present in 52 cities; (iii) quick commerce in 32 cities, (iv) supply chain and distribution covering B2B supplies, warehousing, logistics and distribution for wholesalers and retailers, and (v) platform innovations covering its new initiatives and offerings, such as Swiggy Genie, Swiggy Minis, among others-present in 69 cities.

An analysis report by Anand Rathi stated, “Around 45% of IPO proceeds is embarked for investments directly related to quick commerce business with company planning to expand dark stores count in existing as well as into new cities. 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 872986 Mn value at price-to-sales of 7.8 times of its FY24 financials on post issue which appears to be fairly priced.”

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During FY22-24, Swiggy has grown its revenue by increasing sales of goods and services. In FY22, the company’s total revenue was Rs 5,741.67cr, with Food Delivery accounting for 59% (Rs. 3,391.31cr). By FY24, total revenue grew, with Food Delivery rising to Rs 5,160.13cr but its share dropping to 46%. Quick Commerce saw the highest growth at Rs 978.55cr. Supply Chain & Distribution grew to Rs 4,779.61cr. Dine Out grew from Rs 77.69cr in FY23 to Rs 157.19cr, maintaining a 1% share, while Platform Innovation declined from Rs 765.44cr (13%) to Rs 171.94cr (2%).

A report by Choice Broking stated, “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 operations 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.”

A report by KRChoksey Research stated, “With a consistent rise in Average Order Value (AOV) and a growing network of Dark Stores from 301 in FY22 to 523 in FY24, the company is well-equipped to enhance user engagement and operational efficiency. 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 per MTU. Given these strengths and the projected growth of the online food delivery and Quick Commerce markets, Swiggy is poised for sustained growth. At the upper price band the company is valued at 8x Price to Sales, offering a 76% discount to its competition.”

A report by Aditya Birla Money Ltd stated, “Swiggy’s initial focus on in-house innovation gave it an edge, but competitors like Zomato and Zepto have since overtaken it in food delivery and quick commerce. India’s online food delivery market grew from Rs 112 bn in FY18 to Rs 640 bn in FY23 and is expected to reach Rs 1400-1700 bn by FY28, at a CAGR of 17-22%, while quick commerce, growing at a CAGR of 60-80%, is projected to hit Rs 2.3-4.2 tn by FY28. Swiggy, with 605 dark stores vs Zomato’s 791, highlights this widening gap on critical parameters, and plans to invest fresh capital into expanding dark stores and repaying debt via its subsidiary Scootsy. The company also acquired ‘Lynks logistics’ in FY23 to stimulate B2B kirana business. The company also features event bookings on its platform which could become another big vertical like Zomato.”

Per the report, key risks include:

1) Cutthroat competition with few players in the market. 2) The Qcom. (Instamart) business is a cash burning business with negative CFO. 3) Co. slashed its valuations prior to the IPO from $15 bn to $11.3 bn. 4) FMCG distributors have raised concerns with the CCI about the sustainability and unfair practices of Qcom, which could hinder growth if action is taken.

Swiggy has successfully pioneered the hyperlocal commerce industry in India, launching Food Delivery in 2014 and Quick Commerce in 2020, and is well-recognised as a leader in innovation.

A report by Motilal Oswal Financial Services stated, “Swiggy’s approach of an integrated app offering vs. Zomato’s multi-app approach helps it innovate faster. Their platform can be used to make restaurant reservations (Dineout) , events bookings (SteppinOut), avail product pick-up/ drop-off services (Genie) and engage in other hyperlocal commerce activities (Swiggy Minis, among others). Although Avg MTU is still higher for Zomato, Gross Order Value (GOV) per user is higher for Swiggy. This shows Swiggy’s customer cohorts are more mature and stickier compared to its peer.”

“Swiggy is well positioned to tap huge opportunities in quick commerce. Therefore we believe that as it is fairly priced the issue may be considered for its long term growth as scales up its revenue and gradually improve its bottom line. Hence we give “Subscribe for Long Term” rating to this IPO,” said Anand Rathi Research in an IPO note.

Pioneers in high-frequency hyperlocal commerce with an innovation-driven culture. A steadily expanding user network. Increasing user engagement on the platform. The “Swiggy” brand delivered via a unified app for a consistent user experience. A preferred choice for restaurant, merchant, brand, and delivery partners. The platform fosters network effects through its diverse user and partner base. Led by an experienced management team with strong governance