India’s largest food delivery and quick-commerce firm, Swiggy, opened its maiden public offer today with a size of Rs 11,324 crore. Of this amount, Rs 4,500 crore are a fresh issue, with the balance being an OFS by existing shareholders. The offer is open from today through November 8.
Swiggy starts much-awaited IPO
Swiggy is working toward an initial public offering seeking to tap the rising passion for India’s digital-commerce market.
Growth has indeed been tremendous in areas, such as food delivery, and quick-commerce within recent years, driven by enhanced smartphone penetration, a swing into online services, and Covid-19-driven growth in services that involve delivery.
Swiggy has also diversified into a full spectrum of products to serve its diversified customer demand, using the money from this IPO to improve its competitiveness in India.
IPO Details: Price Band, Lot Size, and Grey Market Premium
Swiggy’s IPO will have a price band of Rs 371-390. Its minimum lot size is placed at 38 shares. This means that the investors need to invest in multiples of 38 shares.
In the grey market, Swiggy’s shares are trading with a modest premium of Rs 12, which means that they are selling at a 3% premium over the upper price band. GMP is an indicator of the sentiment of the market around the IPO and reflects the demand of investors for the shares of food delivery giant.
At the high end of valuation, the Swiggy IPO would suggest a market capitalization of around Rs 87,299 crore. It is valued based on the considerable market share and the wide user base Swiggy has created for itself.
As such, it is emerging as one of the most prominent food delivery companies in India. Swiggy’s nearest competitor, Zomato, had gone public in 2021 to set the trend for platforms engaged in online delivery through the Indian stock exchanges.
This means Rs 4,500 crore fresh will be invested towards some of the key priorities including repaying debt, scaling dark stores for quick commerce operations, building and reinforcing tech infrastructure, marketing and possibly more acquisitions.
The fulfillment centre also known as the dark stores in Swiggy parlance is significant because they need to push up on rapid delivery within small time periods for grocery and everyday commodities.
Proceeds will be channeled to technological capabilities, an aspect on which Swiggy also intends to lean in order to fortify its technologies in a bid to create the algorithms that will help quicken the process, improve automation, reduce cost operationally, and consequently help in giving improved customer experience.
All this is expected to drive the company further to sustainable long-term competitiveness against the high efficiency and speed requirements from quick-commerce.
The most salient use of funds to this end would be investment in marketing initiatives besides mere store expansion and tech upgradations. Brand focus at acquisition and retention would propel the growth in the hugely competitive environment that it competes, both with established players in India but also emerging new-generation start-ups.
Finally, money allocated for acquisitions underscores its intent to enhance and then stabilize market presence through amalgamation of smaller players perhaps or acquisition of technologies targeted for its growth path ahead.
Existing Shareholders and the Offer for Sale Component
There is no principal promoter in Swiggy, and the ownership is spread widely among institutional investors. Most of these institutional investors are also entering the offer for sale.
Accel India, Apoletto Asia, Alpha Wave Ventures, DST Euro Asia, and Norwest Venture Partners are some of the key selling shareholders. In this OFS, some existing investors get to sell parts of their holdings. At the same time, new investors come in and find an exciting story in growth in India’s digital economy.
These major investors participating in the IPO reflect their confidence in Swiggy’s growth potential. Over the years, they have been supporting Swiggy’s journey by providing capital to expand operations, improve technology, and build a strong logistical network across India. Their decision to divest part of their holdings through the OFS may also provide liquidity to fund Swiggy’s next phase of growth.
Market Sentiment and Prospects
The Indian food delivery and quick-commerce sectors are set to grow strongly on account of changing consumer preferences, urbanization, and the rise in disposable incomes. Swiggy has exploited these trends by widening the scope of its services beyond traditional food delivery to include grocery and essentials using its logistical network for various customer demands.
The moderate GMP of Rs 12 indicates that the investors have a cautious but optimistic outlook, meaning that though the enthusiasm is somewhat tempered, there is a lot of interest in the growth prospect of Swiggy. According to industry experts, the IPO may be of great interest to institutional as well as retail investors due to Swiggy’s brand establishment, widespread reach, and future expansion plans.
The IPO has become a landmark for the firm as it deepens its presence in the Indian digital economy. Swiggy is now looking to aggressively compete through the expansion of dark stores, enhancement of technology, and acquisitions.
An IPO will mean not just a big chapter in the life of Swiggy, but also in the growth and scope of India’s very vibrant digital ecosystem. Thereby, for the very first time, investors will now get an opportunity to own some part of one of the best known tech-driven service platforms as Swiggy steps ahead in its journey on the board of the public realm.
