Swiggy IPO– Food and grocery delivery giant Swiggy’s much-anticipated initial public offering (IPO) opened for public subscription today, aiming to raise Rs 11,327.47 crore. The IPO price band has been set between Rs 371 and Rs 390 per share, with the subscription period running until November 8. On the first day, however, Swiggy’s IPO saw limited interest, with only 12% subscription recorded by 5:00 pm, or bids for 1.91 crore shares against the 16.01 crore shares on offer.
Despite Swiggy’s brand recognition, the grey market shows modest interest, with unlisted shares trading at a Rs 11 premium over the issue price, indicating a potential listing gain of only 2.82%. This is a drop from earlier premiums of Rs 12 and Rs 20, reflecting investor hesitancy amidst fluctuating market sentiments.
Financial Performance and Analysts’ Recommendations
Swiggy has reported continuous financial losses over the past three fiscal years. For FY24, the company’s total income rose to Rs 11,634.35 crore, though losses decreased to Rs 2,350.24 crore. Analysts at Bajaj Broking advised a “Subscribe for Long Term” rating, pointing out Swiggy’s negative price-to-earnings (P/E) ratio and aggressive pricing given its loss trajectory.
“Swiggy has yet to demonstrate profitability, with significant losses each year,” stated Bajaj Broking, underscoring that the IPO’s high price-to-book-value ratio raises concerns about its immediate valuation.
Comparing Swiggy and Zomato
Market analysts continue to compare Swiggy with its main competitor, Zomato. According to Akriti Mehrotra, research analyst at StoxBox, Zomato holds a stronger market position, with a higher order growth rate and gross order value. Swiggy’s challenge will be leveraging its IPO proceeds to expand its delivery model and compete with Zomato’s established dark-store network.
Risks: Financial Losses and High Valuation
Swiggy has reported continuous financial losses over the past three fiscal years, posing a risk to prospective investors. In FY24, the company’s income rose to Rs 11,634.35 crore, yet it recorded a net loss of Rs 2,350.24 crore. Analysts at Bajaj Broking have advised caution, noting that Swiggy’s negative price-to-earnings (P/E) ratio and high price-to-book-value ratio may not align with its ongoing loss trajectory.
The Swiggy IPO allotment will be finalized on November 11, and the stock is expected to debut on the BSE and NSE on November 13.
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