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PremiumSwiggy IPO Day 2 Updates: The initial public offer of Swiggy IPO has been subscribed 35% on the second day of subscription today, as per BSE data.
The initial share sale received bid for 5,57,09,140 shares against 16,01,09,703 shares on offer, according to BSE.
The portion for retail investors received 84% subscription while the quota for non-institutional investors got subscribed 14%. The qualified institutional buyers (QIBs) part is booked 28%. The employee portion has been subscribed 1.15 times.
Bengaluru-based Swiggy's shares opened for public subscription in the price band of ₹371 to ₹390 on Wednesday, November 6. The IPO will remain open till Friday, November 8.
At the end of the first day of bidding, Swiggy IPO was subscribed 12%. The IPO received bids for 1,89,80,620 shares as against 16,01,09,703 shares on offer.
The portion reserved for employees was booked the most at 74%, followed by retail investors' quota at 54%.
Non-institutional investors (NIIs) portion received 6% bids at the end of day 1 while the qualified institutional buyers (QIB) quota did not see any bids.
The food delivery giant has attracted significant interest from institutional investors, collecting ₹5,085.02 crore through the anchor book launched on November 5. The company aims to raise ₹11,327 crore from the IPO, which will include a fresh issue of shares valued at ₹4,499 crore alongside an offer for sale (OFS) of ₹6,828 crore.
The secondary share involves exits or partial exits by venture capital firms Accel India, Tencent Cloud Europe, and Alpha Wave Ventures, with early investors having put in between ₹11.17 and ₹178.90 per share, based on their entry timing into the company, according to the disclosures provided.
The company aims to use the proceeds from the new issue for investments in technology and cloud infrastructure; brand marketing and business promotion; repaying debt; as well as allocating funds for inorganic growth and general corporate purposes.
Swiggy, established in 2014, reported a loss of ₹611 crore for the quarter that ended in June 2024, slightly increasing from ₹564 crore during the corresponding period a year ago.
Stay tuned for review, subscription status, more.
The initial public offer of Swiggy IPO has been subscribed 35% on the second day of subscription today, as per BSE data.
The initial share sale received bid for 5,57,09,140 shares against 16,01,09,703 shares on offer, according to BSE.
The portion for retail investors received 84% subscription while the quota for non-institutional investors got subscribed 14%. The qualified institutional buyers (QIBs) part is booked 28%. The employee portion has been subscribed 1.15 times.
• Subsequently, the company purchased Dineout, known for dinner reservations, and later acquired SteppinOut, an event management firm that was previously part of Dineout. This acquisition allowed Swiggy to integrate its platform and provide a diverse range of services to its customers.
• The company operates through five business segments: food delivery (45.9% of Revenue from Operations in FY24), quick commerce (8.7%), out-of-home consumption (1.4%), supply chain and distribution (42.5%), and platform innovations (1.5%).
• Swiggy, established in 2014 under the name “Bundl Technologies Private Limited," is a hyperlocal convenience platform that provides a diverse array of services via its mobile application and website.
• Swiggy originally began its journey with the “Food Delivery" service, and after reaching significant growth, expanded into the Quick Commerce sector with “Swiggy InstaMart" in 2020.
The firm is guided by a group of energetic entrepreneurs and seasoned management professionals with industry knowledge. This team has showcased their leadership abilities in both innovation and execution, significantly influencing the advancement of the online Food Delivery and Quick Commerce sectors in India. The eight-member leadership team collectively boasts 52 years of experience with Swiggy.
In comparing the Swiggy IPO to its listed counterpart Zomato, Prashanth Tapse, Senior Vice President of Research at Mehta Equities, expresses his intention to allocate 70% of his investment funds to Swiggy, noting that the capital from the new IPO can enhance its operating metrics. He further allocates 30% to Zomato, recognizing it has already established its capabilities and is outperforming the sector in terms of growth. He opts for both companies because he aims to capitalize on the sector's growth rather than limiting himself to just one investment. The addressable market for both companies is identical, meaning the growth drivers are also the same for each.
The company plans to utilise the net proceeds to invest in its key subsidiary, Scootsy, manage its debt obligations, grow its network of dark stores in the quick commerce sector, and cover lease or licensing fees related to those dark stores.
In addition, it aims to invest in technology and cloud-based infrastructure. The company also indicated that it will allocate funds for brand marketing and related promotional expenses. Moreover, it intends to set aside resources to support inorganic growth through yet-to-be-specified acquisitions, as well as for general corporate needs.
The initial public offer of Swiggy IPO has been subscribed 25% on the second day of subscription today, at 14:27 IST, as per BSE data.
The initial share sale received bid for 4,07,75,406 shares against 16,01,09,703 shares on offer, at 14:27 IST, according to BSE.
The portion for retail investors received 78% subscription while the quota for non-institutional investors got subscribed 11%. The qualified institutional buyers (QIBs) part is booked 15%. The employee portion has been subscribed 1.07 times.
Swiggy’s integrated application, expanding range of services, and extensive partner network contribute to increased choices and quicker delivery, thereby improving the user experience. Consequently, the company has observed steady growth in Monthly Transacting Users in both the Food Delivery and Quick Commerce sectors. As of June 2024, the platform has reached a significant milestone with 112.7 million users having transacted.
The initial public offer of Swiggy IPO has been subscribed 24% on the second day of subscription today, at 13:03 IST, as per BSE data.
The initial share sale received bid for 3,90,71,410 shares against 16,01,09,703 shares on offer, at 13:03 IST, according to BSE.
The portion for retail investors received 75% subscription while the quota for non-institutional investors got subscribed 10%. The qualified institutional buyers (QIBs) part is booked 14%. The employee portion has been subscribed 1.03 times.
Swiggy's IPO includes a new offering worth ₹4,499 crore, along with an offer-for-sale (OFS) of 175,087,863 equity shares from the company's selling shareholders.
In the OFS, the shareholders selling their stakes include Accel India IV (Mauritius) Ltd, Apoletto Asia Ltd, Alpha Wave Ventures, LP, Coatue PE Asia XI LLC, DST EuroAsia V B.V, Elevation Capital V Ltd, Inspired Elite Investments Ltd, MIH India Food Holdings B.V, Norwest Venture Partners VIIA-Mauritius, and Tencent Cloud Europe B.V.
Tentatively, Swiggy IPO basis of allotment of shares will be finalised on Monday, November 11, and the company will initiate refunds on Tuesday, November 12, while the shares will be credited to the demat account of allottees on the same day following refund. Swiggy share price is likely to be listed on BSE and NSE on Wednesday, November 13.
Almost 50% valuation compared to Zomato gives some comfort although it should not be considered as an arbitrage in valuation. If Swiggy’s EBITDA catches up to 3-4% in the food delivery business, which is currently at 1% and Average Order Value (AOV) improves to ₹550-600 levels in quick commerce with higher non-grocery share, we can see bridging in the valuation gap. Although, this should not be expected in near term.
Swiggy IPO has reserved not less than 75% of the shares in the public issue for qualified institutional buyers (QIB), not more than 15% for non-institutional Institutional Investors (NII), and not more than 10% of the offer is reserved for retail investors. Employees are reserved up to 750,000 equity shares. A discount of ₹25 apiece is being offered to the eligible employees.
The initial public offer of Swiggy IPO has been subscribed 20% on the second day of subscription today, at 11:27 IST, as per BSE data.
The initial share sale received bid for 3,16,60,612 shares against 16,01,09,703 shares on offer, at 11:27 IST, according to BSE.
The portion for retail investors received 70% subscription while the quota for non-institutional investors got subscribed 9%. The qualified institutional buyers (QIBs) part is booked 7%. The employee portion has been subscribed 96%.
We believe Swiggy Ltd IPO brings investors an opportunity to invest in a new age fast growing consumer first technology company offering an easy to use convenience platform. We believe Swiggy has been more efficient in customer acquisition than its competitor Zomato, driven by its unified app model, which enhances cost efficiency and supports user growth. The company’s expansion into Tier 2 and Tier 3 cities, along with its inclusion of groceries and medicines, bolsters its path to profitability.
Given its consistent innovation and strategic expansion, we believe Swiggy’s is well-positioned for sustained growth. Making it a compelling opportunity for investors seeking exposure in the evolving hyperlocal commerce space. Hence, by looking at all attributes we recommend investors to “SUBSCRIBE" the Swiggy Ltd for long term perspective.
Gulati emphasised that Swiggy is the modern day Facebook for old people while the competitors are the young audience focused TikToks & Instagrams.
Further, Mohit believes Swiggy to be a classic story of the “Hare and tortoise" where from being a leapfrogging hare it become complacent & is now loosing market share in its home territory.
“I think the company has lost its mojo on innovation where Zomato and Zepto have benefited. On a valuation basis it deserves to trade lower than Zomato owing to these reasons. Risk reward on this one is more in favour of subscribing to Zomato’s FPO," added Gulati.
Regarding the well-known platform Swiggy, while Kejriwal was conversing with Swiggy's CFO, he expressed dissatisfaction with a certain segment of the business that is currently experiencing losses—the dine-out service. As a member of the Swiggy app, users can enjoy a discount on their bill when they pre-book a table at a restaurant. Currently, the revenue model for this service relies on the advertisements placed by restaurant partners on the app.
There is no recurring revenue from subscribers, aside from the one-time subscription fee. For this business to achieve break-even, a significant increase in the subscriber base is essential. Additionally, there needs to be a substantial rise in advertising revenue to generate funds from hotel partners. Achieving both of these goals appears to be quite challenging in the short to medium term. Therefore, it seems unlikely that this business will reach profitability as one might anticipate.
The initial public offer of Swiggy IPO has been subscribed 15% on the second day of subscription today, at 10:30 IST, as per BSE data.
The initial share sale received bid for 2,38,29,040 shares against 16,01,09,703 shares on offer, at 10:30 IST, according to BSE.
The portion for retail investors received 67% subscription while the quota for non-institutional investors got subscribed 9%. The qualified institutional buyers (QIBs) part is yet to be booked. The employee portion has been subscribed 91%.
“Swiggy, at upper price band of ₹390.0, is valued at Price/Sales, EV/Sales and P/BV multiple of 7.8x/7.3x/7.1x respectively of its FY24 financials on post issue capital. While comparing with Zomato, the issue appearsto be fairly priced on all these parameters. We recommend investors to subscribe the issue for long term investment perspective," the brokerage said.
"As of June 30, 2024, Swiggy reached 112.73 Mn users, demonstrating robust growth supported by a unified app experience that simplifies diverse service offerings. The expansion of Dark Stores coupled with the introduction of non-grocery categories, aims to boost basket sizes and fulfill increasing consumer demand. Swiggy's customercentric approach, characterized by high transaction frequency and a personalized user experience, ensures strong retention rates and a widening gap in Monthly GOV per MTU.
Given these strengths and the projected growth of the online food delivery and Quick Commerce markets, Swiggy is poised for sustained growth. At the upper price band the company is valued at 8x Price to Sales, offering a 76% discount to its competition. Hence, we assign a ‘SUBSCRIBE’ rating," the brokerage said.
"At an upper price band of ₹390/sh, the IPO is priced at EV/sales of 7.8x vs listed industry peer of 17.6x on FY24 revenue. Over FY22-24, the company’s revenue has grown at CAGR of 40.4% vs 70% for Zomato. The fresh proceeds would be majorly utilised for expanding dark stores network for quick commerce growth and marketing and promotional spends.
Management has also stated that the business would continue to burn cash to achieve its objective of attaining large scale coupled with increasing competitive intensity in Quick commerce. We thereby assign “Subscribe for long term" rating to the IPO," the brokerage said.
The online food delivery sector in India expanded from ₹112 billion (US$1.4 billion) in 2018 to ₹640 billion (US$8 billion) in 2023, and it is projected to reach a market size of ₹1400-1700 billion (US$17-21 billion) by 2028, with a compound annual growth rate (CAGR) of 17-22%. In 2023, the leading 60 cities (including metro and Tier 1) accounted for 75-80% of the total market, indicating significant untapped opportunities outside these areas that will fuel growth as the adoption of online food delivery rises.
The increasing availability of organized restaurant supply along with greater online penetration is anticipated to boost the online food delivery market beyond the top 60 cities.
Swiggy IPO GMP today is +9.50. This indicates Swiggy share price was trading at a premium of ₹9.50 in the grey market, according to investorgain.com.
Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Swiggy share price is indicated at ₹399.5 apiece, which is 2.44% higher than the IPO price of ₹390.
Following the grey market activities from the past 15 sessions, the current GMP ( ₹9.50) indicates a trend towards decline. The minimum GMP recorded is ₹0, while the maximum GMP reached ₹25, as reported by experts at investorgain.com.
'Grey market premium' indicates investors' readiness to pay more than the issue price.
Swiggy IPO was subscribed 12% at the end of the first day of the bidding process on Wednesday. The employee and retail investor portions garnered the most bids, with the former booked 74% and the latter 54%.
NII portion was subscribed just 6% while the QIB quota did not receive any bids on the first day of the IPO process.
The bidding for Swiggy IPO will begin again tomorrow at 10 am.
The online food delivery market in India grew from ₹112 billion (US$1.4 billion) in 2018 to ₹640 billion (US$8 billion) in 2023 and is expected to become a ₹1,400-1,700 billion (US$17-21 billion) market by 2028, growing at a CAGR of 17-22%.
Convenience-focused Quick Commerce models are gaining traction among urban consumers and addressing supply chain inefficiencies. This segment is expected to grow rapidly, with a CAGR of 60-80%, reaching ₹2.3-4.2 trillion (US$29-53 billion) by 2028 from ₹224 billion (US$2.8 billion) in 2023.
(Source: RHP/Redseer Report)
As of September 30, 2024, Swiggy's outstanding borrowings (on a consolidated basis) aggregated to ₹ 258.43 crore.
On the first day of bidding for Swiggy IPO, retail portion reached the halfway mark, garnering 50% bids. The retail investors placed bids for 1,45,05,740 shares as aginst 2,89,74,491 shares on offer.
Overall, the IPO was subscribed 11% so far on Day 1.
1. Loyal Hospitality Private Limited;
2. Loyal Hospitality Kitchens Private Limited;
3. MIH India Food Holdings B.V.; and
4. Vijayawada Hospitalities Private Limited
Indian consumers are becoming increasingly digitally savvy with a growing base of 670-680 million smartphone users which is expected to reach 950-990 million by 2028. The increase in household income and purchasing power of millions of Indians along with rapid digitisation has changed consumer behaviour, driving the demand for convenience and digital services. Hyperlocal commerce platforms are favourably placed at the intersection of these dynamics with strong value propositions for stakeholders across the value chains.
Swiggy Limited IPO being the Pioneers of high-frequency hyperlocal commerce is a well-recognised leader in innovation and the brand is synonymous with the categories it is present. The company have reached a milestone of 112.73 million users as of June 30, 2024.
The company’s scale of operations, unified app approach with adjacent categories, engaged user base, and on-demand delivery network creates meaningful opportunities for restaurant partners, merchant partners and brand partners to engage with the user base at low incremental costs. Investors interested in the company can invest in the IPO for the long term.
As of the date of this Red Herring Prospectus, the Board comprises 10 directors, including two Executive Directors and eight Non-Executive Directors, of whom four are Independent Directors (including one woman Director).
The company is a professionally managed organization and does not have an identifiable promoter or members forming part of the ‘promoter group’ as defined under the SEBI ICDR Regulations and the Companies Act.
Swiggy IPO subscribed 9% so far on the first day of the bidding process. The subscription rates stand as follows:
QIB: NIL
NII: 4%
Retail: 41%
Employee: 60%
Source: RHP
Comparison between Swiggy and Zomato on key parameters:
Swiggy Ltd., established in 2013, is a new-age, user-centric technology company offering a comprehensive convenience platform through a single app. Users can order food, groceries, and household items (Instamart) for doorstep delivery via an on-demand network. The platform also includes restaurant reservations, product pick-up/drop-off services (Genie), and other hyperlocal commerce activities. Swiggy enhances its offerings with membership programs like Swiggy One, Swiggy Money, and the Swiggy-HDFC Bank credit card.
Swiggy IPO subscribed 7% so far on Day 1 of the book-built process. Different categories are subscribed as follows:
QIB - NIL
NII - 3%
Retail - 35%
Employee - 50%
Notable celebrities who own shares in Swiggy include cricketers Rahul Dravid and Zaheer Khan, tennis player Rohan Bopanna, filmmaker Karan Johar, and actor-entrepreneur Ashish Chowdhry, according to media reports. Bollywood legends Amitabh Bachchan and Madhuri Dixit Nene, along with Innov8 founder Ritesh Malik, have also invested in the company.
Swiggy's revenue from operations jumped 36.1% year-on-year to ₹11,247.4 crore in FY24 from ₹8,264.6 crore in FY25. Meanwhile, its net loss declined to ₹2,350.2 crore in FY24 from ₹4,179.3 crore in FY23.
Swiggy’s take rates are ahead of Zomato’s, indicating better monetisation of its platform. Swiggy’s integrated app offering, compared to Zomato’s multi-app approach, helps it innovate faster. Swiggy’s platform allows users to make restaurant reservations (Dineout), book events (SteppinOut), avail product pick-up/drop-off services (Genie), and engage in other hyperlocal commerce activities (Swiggy Minis, among others). Although the average MTU (monthly transacting users) is still higher for Zomato, Swiggy's Gross Order Value (GOV) per user is higher. This suggests that Swiggy’s customer cohorts are more mature and stickier compared to its peer.
Swiggy IPO received 5% bids so far on the first day of the bidding process on Wednesday. The IPO garnered 83,48,258 bids as against 16,01,09,703 shares on offer. The retail portion was subscribed 24%, NII portion 2% and employee portion 37%. QIB portion was not yet off the mark.
Swiggy operates in an oligopoly market that is still in its nascent stage, providing ample opportunities for players to carve out their niche. Swiggy’s innovation-driven approach is key to its success, and it could once again lead the way with its new 10-minute food delivery offering. However, given that the company is still making losses at an aggregate level and overall profitability may be some time away, we recommend that only high-risk investors 'Subscribe for the long term.' At the upper price band of ₹390, the issue is priced at 7.8x FY24 market cap to sales, which appears reasonably priced compared to Zomato, trading at 17.5x.
Swiggy IPO received was subscribed 4% so far on the first day of the bidding process. Here's how different quotas were subscribed:
QIBs: NIL
NIIs: 1%
Retail: 17%
Employee: 24%
Overall: 4%
Swiggy IPO received bids for 32,09,366 shares as against 16,01,09,703 shares on offer, suggesting a 2% subscription so far on Day 1.
How different quotas are subscribed:
“At the upper price band of ₹390, Swiggy is available at M-cap/sales of 7.8x (on FY24 financials), which appears to be fairly priced. We assign a “Subscribe" rating for the issue on a long-term investment basis, considering its strong brand recall, diversified offerings, integrated app, rapid scaling, consistent innovation, expansion of dark stores, and promising industry outlook," said Geojit Financial Services in a note.
