Swiggy’s IPO was launched from November 6 to November 8, 2024, with a price band set between ₹371 and ₹390 per share. The IPO aimed to raise about ₹11,327 crore, split between a fresh issue of ₹4,499 crore and an offer for sale totaling ₹6,828 crore. This IPO received strong interest, particularly from institutional investors, and was oversubscribed 3.59 times on the last day of bidding, although demand from retail investors was somewhat lower due to broader market sentiments.
On November 13, 2024, Swiggy shares debuted at ₹420 on the NSE, a 7.69% premium over the issue price. However, initial trading showed some fluctuation, reflecting the mixed market sentiment for recent tech IPOs. Swiggy plans to use the IPO funds for expanding its quick-commerce services, enhancing its technology infrastructure, and brand marketing, along with some debt repayment
Deciding whether to apply for Swiggy’s IPO depends on both the company’s potential and the current market conditions:
Pros of Investing:
Strong Market Position: Swiggy is one of India’s leading food and grocery delivery platforms, competing closely with Zomato and Amazon Fresh. Its diversified services, including Swiggy Genie (delivery of personal items), Instamart (quick grocery delivery), and Swiggy Dineout, show strong growth potential
Expansion Plans: Swiggy intends to use IPO funds to expand its network of “dark stores” (mini-warehouses for faster delivery), enhance its technology infrastructure, and invest in brand marketing
Market Demand and Oversubscription: Swiggy’s IPO was oversubscribed 3.59 times, with strong interest from institutional investors, signaling confidence in its growth trajectory
Risks and Considerations:
High Valuation with No Immediate Profitability: Swiggy operates at a net loss, with a Return on Net Worth (RoNW) of -30.16%, and has yet to become profitable. This could impact investor returns in the short term, as valuations are high compared to peers like Zomato
Competitive and Regulatory Pressures: The food delivery and quick-commerce sectors are highly competitive, with fluctuating demand and regulatory hurdles that could impact Swiggy’s growth.
Mixed Market Sentiment: Recent IPOs in the tech sector have seen volatility, and Swiggy’s stock saw fluctuations immediately after listing, reflecting cautious investor sentiment.
Final Take:
If you’re looking for long-term growth and can tolerate some volatility, Swiggy’s IPO might align well with your portfolio. However, for short-term gains, consider the risks associated with the company’s current financials and market conditions.
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