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Swiggy IPO: What You Need to Know

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Published Date: 13 Sep 2024Updated Date: 31 Dec 20246 mins readBy MOFSL

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Swiggy, India's leading food delivery giant, is set to make waves with its upcoming Initial Public Offering (IPO), marking a pivotal milestone since its inception in 2014. Having rapidly expanded into a key player in both food delivery and instant commerce, Swiggy has positioned itself as a formidable competitor to Zomato, which went public recently.

Initially, Swiggy planned to raise ₹3,750 crore through a fresh issue of shares. However, responding to the market's competitive dynamics, the company increased its target to ₹5,000 crore, adding an additional ₹1,250 crore to its IPO size. This adjustment underscores Swiggy's aggressive growth strategy in a fast-paced market.

With Swiggy's strong market presence and ambitious growth plans, the IPO is expected to be one of the most anticipated offerings in India's food delivery space. Let's explore whether investing in Swiggy's IPO could be the right move for you.

Upcoming IPOs to watch: Apply and invest in the future!

IPO Objective

The company aims to raise funds through a fresh equity issue totalling up to ₹3,750 crore, along with an offer for sale (OFS) of up to 185,286,265 equity shares. Of the total OFS, 63.8% will be offloaded by Prosus, with other shareholders also divesting their stakes.

We plan to utilize the net proceeds to invest in Scootsy for repayment or prepayment of its borrowings and for expanding our Quick Commerce segment by setting up new Dark Stores and covering lease or license payments. Additionally, funds will be allocated to enhance our technology and cloud infrastructure, boost brand marketing and promotion across segments, and support inorganic growth through acquisitions and general corporate purposes.

Several prominent investors participating in the offer for sale include Accel, Alpha Wave Ventures, Apoletto Asia, Ark India Food-Tech Trust, Baron Emerging Markets Fund, Coatue PE Asia, DST Asia VI, Elevation Capital, Goldman Sachs, Harmony Partners, Norwest Venture Partners, Tencent Cloud Europe, and West Street Global Growth Partners, among others.

Top Shareholders: Strong Financial Backing

Swiggy's top shareholders include some of the most prominent global venture capital firms and tech investors. Leading the list is Prosus, holding the largest stake at 33%, followed by Elevation Capital with 8%, and Accel with 6.30%. Other major investors include DST Global with 4.90%, Tencent at 4.40%, Meituan with 4%, Norwest Venture Partners holding 3.80%, and SoftBank with a 3.70% stake. These strategic investments reflect Swiggy's strong financial backing and the confidence of global investors in its long-term growth potential.

Financial Performance in FY24

Swiggy delivered an impressive 36% increase in operating revenue, reaching ₹11,247 crore in FY24. Additionally, the company managed to reduce its losses by 44%, bringing the total to ₹2,350 crore.

For the first three quarters of FY24, Swiggy reported revenue of ₹5,476 crore, with a ₹1,600 crore loss. The food delivery segment saw 17% growth, generating ₹6,100 crore, while its Instamart quick commerce vertical reported ₹1,100 crore in gross revenue.

Head-to-Head with Zomato

Swiggy continues to compete closely with Zomato in the food delivery market but lags in the grocery delivery segment. In contrast, Zomato posted a net profit of ₹351 crore in FY24 and maintained profitability into Q1 FY25.

Zomato's overall revenue jumped by 71% in FY24, reaching ₹12,114 crore. Of this, ₹6,161 crore came from its food delivery business and ₹2,301 crore from its grocery arm, Blinkit. Swiggy's grocery business, via Instamart, has yet to catch up with Zomato’s scale in this segment.

New Investors on Board

The IPO-bound Swiggy has attracted new investors recently, with Hindustan Composites acquiring a minority stake. This move follows an earlier investment by Amitabh Bachchan’s family office. Additionally, Raamdeo Agrawal, chairman of Motilal Oswal Financial Services, has also acquired a stake, showcasing growing investor confidence in the company’s long-term potential.

In the lead-up to its IPO, the company secured investments from several high-profile individuals, including the family office of actor Amitabh Bachchan, actress Madhuri Dixit, cricketers Rahul Dravid and Zaheer Khan, tennis star Rohan Bopanna, director Karan Johar, and actor Ashish Chowdhry.

With this, Swiggy has become the latest Indian startup to prepare for an IPO, joining a growing list of companies tapping into favourable market conditions and increasing investor interest in tech ventures. This year alone, ten Indian startups, including Go Digit General Insurance, FirstCry, Unicommerce, TBO Tek, Ola Electric, and Awfis, have gone public, riding the wave of positive market sentiment.

Conclusion: A Major IPO to Watch

With its strong market presence, impressive financial backing, and aggressive growth strategies, Swiggy's upcoming IPO is poised to be one of the most significant offerings in India's tech sector. The company has demonstrated resilience in an intensely competitive market, managing to increase revenues and cut losses significantly. However, its ability to compete with Zomato in the grocery space will be crucial to watch.

For investors looking to gain exposure to India’s rapidly growing food delivery and instant commerce sectors, Swiggy’s IPO offers a compelling opportunity.