The stock closed 17% above its issue price at Rs 455.95 in a weak market, surpassing analysts’ expectations of a tepid debut. The company’s market capitalization at close on Wednesday was Rs1.02 lakh crore.
Brokerage Macquarie initiated coverage on the stock with an ‘underperform’ rating and a target price of Rs 325, implying a 28.7% downside from Wednesday’s close. It said Swiggy has a ‘long and winding road to profitability.’
“We are very excited for the next phase of our journey as a company,” said Sriharsha Majety, cofounder and CEO, Swiggy, in a press conference following the listing ceremony at NSE. “As for the profitability, even in the build-up to the IPO, we have talked about how the food delivery business has already gotten profitable and we expect that to continue at a steady clip.”
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In the first quarter of FY25, Swiggy posted an operating revenue of Rs 3,222 crore, up 34% from the same period a year ago. Its net loss widened to Rs 611 crore in April-June from Rs 564 crore a year ago. Rival Zomato’s consolidated net profit soared 389% to Rs 176 crore in the second quarter of FY24, compared with Rs 36 crore a year ago. Revenue from operations rose 68% to Rs 4,799 crore in the reporting period.
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ETtechSwiggy’s Rs 11,327 crore IPO, the country’s sixth largest, received bids for 3.59 times the shares on offer driven by demand from institutional investors. Investors had placed bids for 57.53 crore shares in the issue, against the 16.01 crore shares offered by the company. It had also raised Rs 5,085.02 crore from 151 anchor investors on November 5.
In the IPO, investors such as Prosus, Accel, Elevation Capital, Chinese tech majors Meituan and Tencent, along with Swiggy’s founders Majety, Nandan Reddy, and Rahul Jaimini, had sold over 175 million shares.
Japan’s SoftBank’s $450 million investment in Swiggy was now valued at close to $1 billion as on the listing day. The fund did not sell shares in the IPO. The value of Prosus’ holding, which is owns 25% stake, was valued at $ 3 billion on Wednesday–a gain of over $2 billion on its total investment of $1.3 billion in the firm. The Dutch-listed investment arm of South Africa’s Naspers sold shares worth $500 million during the OFS.
Swiggy is the only company other than Coal India with an IPO size of over Rs 10,000 crore to have listed above the issue price.
Companies with large IPOs such as Hyundai Motor India, LIC, Paytm, GIC and SBI Cards and Payments had listed below issue price.
In its IPO documents prospectus, Swiggy indicated plans to allocate a significant portion of the money raised from the issue to expand its quick commerce business, Instamart, which competes with Zomato-owned Blinkit, Zepto, Flipkart Quick, and Bigbasket’s BB Now.
“The increase in IPO fundraise by over 19%— the majority of which will go to Instamart,” Majety told ET in an earlier interview.
In the press meet on Wednesday, he said, “If you look at the mix of our businesses, even in our quick commerce platform Instamart, we have shown a healthy trajectory over the last two-three years.”
