Swiggy IPO: Know Everything You Want
Swiggy IPO: Know Everything You Want
Swiggy, the renowned Indian food delivery giant, is poised to make a significant market impact with its upcoming Initial Public Offering (IPO). Beginning in 2014, Swiggy rapidly evolved into a standout startup in the food delivery and instant commerce sectors in India, becoming rival to the recently listed – Zomato. Receiving approval by its shareholders, Swiggy aims to raise $1.25 billion through its IPO, with plans to offer $450 million (Rs 3,750 crores) in new shares and an additional $800 million (Rs 6,664 crores) in shares from existing backers. This move signifies Swiggy’s strategic readiness to enter the public markets and indicates a pivotal moment in India’s startup ecosystem. Let’s learn more in detail and understand whether you should invest in this IPO or not!
Swiggy’s Journey So Far
Swiggy’s journey from a food delivery startup to a quick commerce giant has been nothing short of remarkable. Despite facing intense competition from rivals like Zomato and Blinkit, Swiggy has managed to carve out a significant market share, thanks to its innovative business model and relentless focus on customer service.
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In terms of market share, Swiggy commands about 45% as of March 2024 of the Indian food delivery market, serving between 16 million and 17 million monthly transacting users. The startup’s food delivery business, which operates in 600 Indian cities, has been a significant revenue generator, contributing to its overall profitability.
Financial Performance
Swiggy’s financial performance is a critical factor that potential investors will scrutinize. In the fiscal year ending March 2023, Swiggy reported a revenue of INR 8,265 Crore, marking a 45% increase from the previous fiscal year. However, the company also reported a net loss of INR 4,179 Crore, highlighting the challenges Swiggy faces in turning a profit in a fiercely competitive market.
The Race of Quick Commerce
Quick commerce has emerged as a key driver of profitability for food delivery companies. For Swiggy, its quick commerce business, Instamart, has been a significant contributor to its revenue growth. However, Instamart has been facing increasing competition from Blinkit and Zepto, which have been making significant inroads into the quick commerce space.
There are arguments that Swiggy should have grown faster than Zomato due to higher losses & investments in scaling Instamart, Swiggy’s quick-commerce unit. Both companies have a strong focus on food delivery, with Zomato acquiring Grofers and renaming it Blinkit, resulting in less long-term spending while gaining the same capabilities. However, market share may not be an ideal metric to gauge the food delivery market, as Zomato is a listed company with a better recall value. Swiggy plans for a $1 billion IPO this year. Customer loyalty is not to an app but to whoever offers the cheapest price for a meal, making it unlikely that the food delivery market will be dominated by a single player. Both companies prioritize profitability improvement over market share gains, with Zomato currently ahead in this race.
Swiggy’s IPO: Key Details
According to regulatory filings, Swiggy’s upcoming IPO is set to include a fresh issue of shares valued at INR 3,750.1 crore, along with an offer-for-sale component worth INR 6,664 crore. This strategic move is expected to have a profound impact on Swiggy’s financial standing, providing a substantial influx of capital that can be utilized to fuel its growth initiatives.
By issuing new shares, Swiggy can raise funds directly from the market, which can then be reinvested into the business. This infusion of capital can be instrumental in funding expansion plans, technological advancements, and strategic acquisitions, all of which are crucial for maintaining and enhancing Swiggy’s competitive edge in the dynamic food delivery and quick commerce sectors.
The offer-for-sale component, which involves existing shareholders selling a portion of their stakes in the company, allows them to realize their investments and potentially unlock value. This component also contributes to Swiggy’s overall financial position, as the proceeds from the sale can be utilized for various purposes, including debt repayment and working capital requirements.
Key Investors & Market Sentiment
Swiggy’s key investors include global giants such as Prosus, Accel, SoftBank, and Invesco, among others. Prosus, which owns a 33% stake in Swiggy, is expected to sell a significant portion of its stake in the offer-for-sale component of the IPO.
The market sentiment towards Swiggy’s IPO will be a critical factor determining its success. While Swiggy’s robust growth and market leadership position make it an attractive proposition for investors, its inability to turn a profit could potentially dampen investor enthusiasm.
Future Outlook
Despite the challenges, the future outlook for Swiggy remains positive. The Indian e-commerce market is projected to cross the $400 Bn+ mark by 2030, and with online food delivery platforms expected to account for a significant portion of this growth, Swiggy is well-positioned to capitalize on this opportunity.
Swiggy’s IPO represents a significant milestone for the Indian startup ecosystem. While profitability remains a concern, the company’s robust growth, market leadership position, and strong investor backing make it an exciting proposition for potential investors. As we move closer to the IPO, it will be interesting to see how the market reacts to Swiggy’s public debut.
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