Swiggy Ltd, the food and grocery delivery company, is set to debut its shares on the stock exchanges today, following its Rs 11,300-crore initial public offering (IPO). This marks the second-largest public issue of the year, after Hyundai Motor India Ltd’s Rs 27,870-crore offer. The Swiggy IPO, which opened for subscription on November 6 and closed on November 8, was oversubscribed by 3.59 times. Despite the strong demand, analysts predict that the shares may list flat or at a discount to the offer price, urging caution for investors who were not allotted shares during the IPO.
The price band for Swiggy’s IPO was set between Rs 371 and Rs 390 per share. The offer included a fresh issue of Rs 4,499 crore and an offer-for-sale (OFS) worth Rs 6,825 crore. Nearly 60% of the IPO proceeds will benefit existing shareholders, with MIH India Food Holdings (a Prosus NV affiliate) being the largest shareholder with a 30.93% stake. Other significant shareholders include Accel India (4.71%) and Tencent Cloud (3.64%). Founders Sriharsha Majety and Lakshmi Nandan Reddy Obul hold 5.36% and 1.75% stakes, respectively.
The IPO saw strong demand, particularly from Qualified Institutional Buyers (QIBs), who subscribed 6.02 times the shares offered. Retail investors oversubscribed their quota by 1.14 times, while Non-Institutional Investors (NIIs) placed bids for 1.79 crore shares, against the total offering of 4.35 crore shares.
Despite the oversubscription, analysts remain cautious, citing Swiggy’s negative cash flow model, intense competition, and the current market sentiment as factors that may lead to a flat or negative listing. Mehta Securities, in its analysis, stated that the IPO received a sluggish response from retail and NII investors, noting concerns over Swiggy’s business model and the competitive pressures it faces. The firm expects the shares to list within a range of +/- 5-10% of the offer price, and recommends that investors who have been allotted shares not expect immediate listing gains.
Swiggy plans to use the IPO proceeds for various strategic initiatives, including expanding its Dark Store network for its quick-commerce segment, investing in its subsidiary Scootsy, and enhancing its technology and infrastructure. The company also aims to allocate funds for brand marketing and business promotion. Financially, Swiggy has faced significant losses in recent years, with a reported loss of Rs 2,350 crore in FY24, although its total income has increased to Rs 11,634 crore from Rs 8,714 crore in the previous year.
