Swiggy, India’s leading food delivery platform, has officially closed its much-anticipated Initial Public Offering (IPO) after a three-day subscription window, which ended on November 8, 2024.
The IPO, offering a price range of ₹371 to ₹390 per share, has generated considerable interest from investors across various categories.
Financials and Plans for Expansion
The company, which has grown rapidly since its inception in 2014, has set a total issue size of ₹11,327 crore.
Of this, ₹4,499 crore is a fresh issue, with the remaining ₹6,828 crore offered through an offer for sale.
The IPO proceeds will be utilized across several key initiatives, including significant investments in its quick commerce platform, Instamart, which competes against the likes of Zepto and Zomato-backed Blinkit.
Swiggy’s financial performance for FY24 saw a strong revenue growth of 36%, reaching ₹11,247 crore.
However, the company’s losses only reduced by 44% to ₹2,350 crore during the same period.
Despite its growth, Swiggy has faced challenges in managing its high operating costs, which include advertising and delivery expenses.
The fresh capital raised from the IPO will primarily be directed towards expanding its quick commerce operations, including building more dark stores and enhancing technology infrastructure.
Swiggy also plans to utilize part of the funds for debt repayment and brand marketing.
Subscription Data and Investor Interest
As of November 8, 2024, Swiggy’s IPO has been oversubscribed by 3.59 times, with Qualified Institutional Buyers (QIBs) showing the strongest demand at a subscription rate of 6.02 times.
Retail Individual Investors (RIIs) and Employees also demonstrated significant interest, with subscription rates of 1.14 times and 1.65 times, respectively.
The IPO’s success underscores the investor confidence in Swiggy’s growth trajectory, despite the company’s challenges in achieving profitability.
Risks and Challenges Ahead
While Swiggy is well-positioned in India’s food delivery and quick commerce markets, it faces intense competition from established players like Zomato and new entrants in the quick commerce space.
The company’s success hinges on managing costs, retaining customers, and efficiently expanding its dark stores for Instamart.
Additionally, Swiggy will need to ensure that it continues to maintain strong relationships with its restaurant and merchant partners.
Any disruption in these relationships could negatively impact order volumes and, in turn, Swiggy’s financial health.
Regulatory risks also pose a challenge, as changes in government regulations for the e-commerce and food delivery sectors could affect Swiggy’s operations and market demand.
The Road Ahead
With its IPO priced between ₹371 and ₹390 per share, Swiggy is scheduled for listing on November 13, 2024.
As the company embarks on its journey as a publicly traded entity, it will be looking to strengthen its market position, diversify its services, and challenge the dominance of competitors like Zomato.
The IPO proceeds will be a critical part of Swiggy’s strategy to maintain its leadership in India’s fast-evolving food delivery and quick commerce sectors, as it seeks to expand its reach to millions more households across the country.
