Swiggy Ltd, the popular food and grocery delivery service, is set to list its shares on the stock exchanges today after completing a Rs 11,300-crore initial public offering (IPO). This marks the second-largest public offering of the year, following Hyundai Motor India’s Rs 27,870-crore issue. Swiggy’s IPO, which was open for subscription between November 6 and November 8, received strong investor interest, with the offering being oversubscribed by 3.59 times. However, analysts predict the shares may debut either flat or at a discount to the offer price, cautioning investors who were not allotted shares during the IPO.
The IPO had a price band ranging from Rs 371 to Rs 390 per share, with the offer comprising a fresh issue of Rs 4,499 crore and an offer-for-sale (OFS) worth Rs 6,825 crore. About 60% of the IPO proceeds will go to existing shareholders, with MIH India Food Holdings (a subsidiary of Prosus NV) being the largest shareholder, holding 30.93% of the company. Other major stakeholders include Accel India (4.71%) and Tencent Cloud (3.64%). Founders Sriharsha Majety and Lakshmi Nandan Reddy Obul own 5.36% and 1.75% of the company, respectively.
The IPO saw a notable demand from Qualified Institutional Buyers (QIBs), who subscribed to 6.02 times the shares offered. Retail investors oversubscribed their portion by 1.14 times, while Non-Institutional Investors (NIIs) bid for 1.79 crore shares, against the total offering of 4.35 crore shares.
Despite the strong oversubscription, analysts are cautious about the listing, pointing to Swiggy’s negative cash flow, fierce competition, and prevailing market sentiment as reasons the shares could list flat or lower. Mehta Securities noted a weaker-than-expected response from retail and NII investors, citing concerns over Swiggy’s business model and competitive challenges. The firm forecasts that the shares will list within a 5-10% range of the offer price and recommends that investors who received allocations should not expect immediate gains.
Swiggy intends to use the proceeds from the IPO for strategic growth initiatives, including expanding its Dark Store network for quick-commerce, investing in its subsidiary Scootsy, and enhancing its technological and infrastructure capabilities. The company also plans to allocate funds for brand marketing and business development. Despite facing significant losses, reporting a Rs 2,350 crore loss in FY24, Swiggy’s total revenue has increased to Rs 11,634 crore from Rs 8,714 crore in the previous year.
