Swiggy IPO Day 3 Live: Swiggy IPO subscribed 0.72 times so far

Swiggy remained optimistic of growth in quick commerce amid growing competition from deep pocket players and said it has grown amid intense competition over the past decade, an official said on Thursday.

In an interview to PTI, CEO Food of Swiggy, Rohit Kapoor, acknowledged the possibility of the entry of Jio into the hyperlocal delivery market as a competitor, but underscored that building a successful business in this sector requires more than just capital.

Speaking on the competitive dynamics, Kapoor said that while funding is important, it is not the sole determinant of long-term success, referencing examples of well-capitalised players in India who failed to establish a lasting presence.

“Just having a lot of capital has not resulted in great businesses in India,” the official said, adding that success hinges on several other elements,” he said.

“You need a strong ability to hire top technical talent, and that’s something traditional companies often struggle with. Beyond talent, a deep understanding of the Indian consumer – something we’ve developed over a decade of experience in kitchens across the country – is essential,” Kapoor said.

Reflecting on Swiggy’s experience in the evolving food delivery landscape, the company noted that agility and rapid decision-making are crucial to staying competitive.

“Our orientation towards speed allows us to launch a new category quickly, while others might take months to finalize their plans,” the official explained, highlighting the company’s proactive approach in an industry where consumer expectations are high and competition is intense.

The official highlighted the changing nature of the sector, noting that 10 years ago, the Indian food delivery market was crowded with players like Foodpanda, TinyOwl, and even global major Amazon. Many of these companies have since exited, unable to maintain traction, reflecting the challenges within the sector.

“Our focus remains on understanding consumer needs and rapidly adapting to trends, which we believe provides us an edge, irrespective of who enters the market,” Kapoor stated.

Quick Commerce remains a major growth potential with the industry growing at 60-80 per cent.

Swiggy has hit the Rs 11,327 crore IPO comprising fresh issue of shares worth Rs 4,499 crore, along with an offer for sale (OFS) of Rs 6,828 crore.

The shares will be available for subscription in the price range of Rs 371 to Rs 390 apiece.

The company plans to utilise proceeds from the fresh issue for investing in technology and cloud infrastructure; brand marketing and business promotion; debt payment; and funds will also be allocated for inorganic growth and general corporate purposes.

Swiggy, founded in 2014, posted a loss of Rs 611 crore in the quarter ended June 2024, narrowing from Rs 564 crore in the same period last year.

PTI report

QIB portion: 0.46 times

NIIs: 0.17 times

Retail investors: 0.92 times

Employee reserved: 1.29 times

QIB portion: 0.34 times

NIIs: 0.16 times

Retail investors: 0.89 times

Employee reserved: 1.22 times

Swiggy’s recent IPO filing shows significant differences in its business model compared to competitor Zomato, despite both being major players in India’s food delivery market. While Swiggy’s B2C operations, including food delivery and quick commerce, account for 61 per cent of revenue, its B2B supply chain segment contributes a substantial 39 per cent - marking a key distinction from Zomato’s business structure.

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Swiggy’s platform saw a significant increase in its average monthly transacting delivery partners, with 457,249 delivery partners active in the three-month period ending June 30, 2024, up from 350,280 during the same period in 2023. For the fiscal year 2024, this figure stood at 392,589, reflecting growth from previous years (322,819 in 2023 and 243,496 in 2022).

On average, delivery partners earned ₹58.27 per order in the three months ended June 2024, slightly up from ₹55.98 in the same period of 2023. Over the fiscal year 2024, the average earnings were ₹56.01 per order, down from ₹58.99 and ₹59.23 in the previous years.

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Swiggy IPO has been subscribed 35 per cent or 0.35 times on the second day. The IPO opened on Wednesday saw a muted response from investors with a 12 per cent subscription. 

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Swiggy IPO: Retail portion booked 0.81 times, QIBs 0.28 times, NIIs 0.12 times, and employee portion 1.11 times.

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Swiggy IPO has been subscribed 0.34 times as of 3.36 pm on November 7, 2024. QIB portion has been subscribed 0.28 times, NII 0.12 times, retail 0.81 times, and those reserved for employees 1.11 times. The issue closes on November 8, 2024. 

Swiggy IPO has been subscribed 31 per cent or 0.31 times so far on the second day. The IPO opened on Wednesday saw a muted response from investors with a 12 per cent subscription. 

As at 3 pm on November 7, 2024, the retail portion was subscribed 0.80 times, employee portion was 1.10 times, QIBs bid 0.24 times, and NIIs portion 0.12 times.

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Brokerage Motilal Oswal recognised that Swiggy pioneered the hyperlocal commerce industry in India, launching food delivery in 2014 and quick commerce in 2020, and is well-recognised as a leader in innovation.

Swiggy operates in an oligopoly market which is at a nascent stage, thus providing enough opportunities for players to create their niche.

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Indian equity benchmarks extended their losses in afternoon trading on Thursday, with the BSE Sensex plunging 782.84 points to 79,595.29 and the NSE Nifty dropping 262.10 points to 24,221.95, marking a decline of 0.97 per cent and 1.07 per cent respectively.

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Bajaj Broking has recommended a “Subscribe for Long Term” rating for food delivery giant Swiggy Limited’s initial public offering (IPO), citing persistent losses despite revenue growth. The IPO is priced between ₹371 and ₹390 per share.

The company reported revenue of ₹11,634 crore in FY24, while losses decreased to ₹2,350 crore.

Bajaj Broking’s analysis indicates aggressive valuation metrics, including a price-to-book ratio of 11.60 based on June 2024 figures, despite negative earnings per share and return on net worth.

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Swiggy IPO has been subscribed 0.25 times so far on the second day. The IPO opened on Wednesday saw a muted response from investors with a 12 per cent subscription. 

Retail portion booked 0.76 times, QIBs 0.15 times, NIIs 0.11 times, and employee portion 1.04 times.

Madhu Balaji of businessline writes

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QIB: 0.14 times

NIIs: 0.10 times

Retail investors: 0.73 times

Employee reserved: 1.00 times

Total 0.24 times

Swiggy confronts intense competition from Zomato in the food delivery sector, potentially impacting its market share and customer acquisition costs.

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Analysts view Swiggy’s diverse portfolio, encompassing food delivery, grocery services, and restaurant reservations, as a competitive advantage over rivals like Zomato.

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One way in which quick commerce differs from food delivery is that providers incur costs via investing in warehouses and dark stores to fulfil orders

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According to Rajan Shinde, Research Analyst at Mehta Equities, Swiggy’s market cap to sales ratio of 7.8x appears fairly valued compared to competitor Zomato.

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Swiggy IPO has been subscribed 0.15 times as of 10.30 am on November 7, 2024. NII portion has been subscribed 0.09 times, retail 0.66 times, and those reserved for employees 0.90 times. The issue closes on November 8, 2024. 

Retail portion: 0.64 times

Employee portion: 0.87 times

NIIs: 0.08 times

QIB: NIL

Total 0.14 times

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The Food Safety and Standards Authority of India (FSSAI) is likely to meet quick commerce platforms next week to discuss issues regarding violations of food safety standards. This comes at a time when food regulator and states food safety commissioners have in recent months stepped up surveillance of dark stores to check on adherence with food safety standards.

Meenakshi Verma Ambwani of businessline reports

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The much-awaited ​Swiggy​’s initial public offering that opened ​on Wednesday​ saw a muted response from investors. The IPO targets ₹11,327.43 crore through a combination of fresh issue worth ₹4,499 crore and offer for sale of 17.51 crore shares worth ₹6,828.43 crore. The IPO,​ priced at ₹371-390​, will close on November 8 and the lot size is 38 shares.

KS Badri Narayanan of businessline writes

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Swiggy IPO has been subscribed 0.11 times as of 3.42 pm on November 6, 2024. NII portion has been subscribed 0.05 times, retail 0.51 times, and those reserved for employees 0.69 times. The issue closes on November 8, 2024. 

As at 3 pm, the IPO has been subscribed 0.10 times/ 10 per cent. 

Retail portion: 0.48 times 

Employee portion: 0.65 times 

NIIs: 0.05 times 

QIB: NIL 

“Swiggy is well positioned to tap huge opportunities in quick commerce. Therefore we believe that as it is fairly priced the issue may be considered for its long term growth as scales up its revenue and gradually improve its bottom line. Hence we give “SUBCRIBE for LONG TERM” rating to this IPO.”

Swiggy, whose initial public offering opened or public bidding today, November 6, saw its average monthly transacting restaurant partners for food delivery rise to 223,671 in the quarter endied June 30, 2024, from 183,138 in the same quarter of the previous year.

For out-of-home consumption services, Swiggy recorded an average of 33,352 active monthly restaurants, a rise from 22,889 a year earlier.

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As at 2.12 pm, the IPO has been subscribed 0.09 times.

Retail portion: 0.44 times

Employee portion: 0.61 times

NIIs: 0.04 times

QIB: NIL

Swiggy IPO opens for bidding; Know more

Swiggy IPO opened for subscription on November 6, 2024. The IPO targets ₹11,327.43 crore through a combination of fresh issue worth ₹4,499 crore and offer for sale of 17.51 crore shares worth ₹6,828.43 crore.

On day 1, the IPO was subscribed 12 per cent or 0.12 times. Retail investors subscribed 0.54 times and employee portion subscribed 0.74 times. NIIs remained lukewarm at 0.06 times while QIBs’ bids were nil.

The IPO closes on November 8, 2024.

Ahead of the IPO process, Swiggy mobilised ₹5,085 crore from anchor investors by allotting 13.04 crore shares to 151 funds at ₹390.

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Swiggy Ltd., a key player in India’s food and grocery delivery sector, says it relies on a large network of gig-based delivery partners.

As of June 30, 2024, Swiggy’s platform supported an average of 457,249 active delivery partners per month, up from 350,280 in the same period in 2023. The average delivery charge per order paid to partners increased to ₹58.27 from ₹55.98, while the average number of orders processed per partner fell to 463 from 515, indicating changes in partner activity or demand patterns. On a fiscal basis, the average monthly transacting delivery partners have increased from 243,496 in FY22 to 392,589 in FY24.

Swiggy has experienced occasional strikes in various locations, as delivery partners have raised concerns about pay structure, earnings, insurance, and working conditions. Although these strikes did not significantly disrupt operations, Swiggy acknowledges that future strikes, competition from other platforms, and potential legislative changes could impact its delivery network and ability to serve orders efficiently.

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As at 12.24 pm on day 1, the IPO was subscribed 7 per cent or 0.07 times. Retail investors subscribed 0.34 times and employee portion subscribed 0.49 times. NIIs remained lukewarm at 0.03 times while QIBs’ bid were nil at the time of writing.

Swiggy IPO open for bids from Nov. 6-8

Price band set at 371-390 rupees

Grey market indicates modest 5% premium on listing - analyst

QIB - NIL 

NII - 0.02 times 

RIIs 0- 0.27 times 

Employee Reserved - 0.40 times 

Total: 0.06 times 

What is the one key item of interest to prospective retail investors? The challenges on its path to profitability is key to its valuation. In the first quarter of FY25, Swiggy’s Gross Order Value (GOV) from its B2C (Business-to-Consumer) segment rose by 23% year over year, reaching ₹10,189 crore. This metric indicates the total monetary value of orders executed on the platform. Additionally, Swiggy’s B2C revenue saw a growth of 35%, amounting to ₹1,954 crore for the quarter.

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Swiggy, established in 2014, has evolved from a food delivery startup to a multi-service platform additionally offering grocery delivery, meal planning, and cloud kitchens. Swiggy’s IPO is anticipated to attract the attention of investors keen on India’s tech-driven consumer market.

Swiggy’s IPO opened today, November 6, for bidding by investors and is set to close on November 8. It comprises both a fresh issue and an offer for sale. Swiggy plans to raise ₹4,499 crore through fresh issue of equity shares, with the IPO listing on the BSE and the National Stock Exchange (NSE). The remaining ₹11,327 crore of the total offer will comprise offer for sale of existing shares. Swiggy’s corporate and individual selling shareholders include prominent venture capital players such as Accel India IV and Tencent Cloud Europe.

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The number of filings for initial public offerings (IPOs) this year has touched a record, surpassing the previous high set three years ago.

Total filings until October stood at 132, higher than the 126 seen in the whole of 2021. The September quarter alone saw 75 filings.

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Swiggy, the Indian food delivery giant, recently raised $605 million by selling shares to institutional investors, including well-known names like Fidelity and Norges Bank.

This funding move marks a significant step as Swiggy prepares for a $1.35 billion initial public offering (IPO), expected to be India’s second-largest IPO this year. The share sale reflects strong institutional interest in Swiggy’s stock, underscoring confidence in the company’s growth potential and market position.

In addition to Fidelity and Norges, domestic mutual funds have also shown keen interest in Swiggy’s offering, collectively purchasing shares worth $246 million, as noted in a stock exchange filing by Swiggy.

This local support from mutual funds further strengthens Swiggy’s financial backing as it moves toward its IPO, which has generated widespread anticipation in India’s financial markets.

Swiggy Limited has emerged as a key player in India’s burgeoning on-demand delivery landscape. Its user-friendly app connects millions with a diverse range of services, extending far beyond food delivery to encompass groceries and logistics. Focused on innovation and convenience, Swiggy has solidified its presence, particularly in urban centres across the nation.

This IPO will feature a total issue size of ₹11,327.43 crores, comprising a fresh issue of ₹4,499 crores and an offer for sale of ₹6,828.43 crores, inviting investors to partake in its growth story.

Inputs from PTI report

“At the upper price band of ₹390, Swiggy is available at Mcap/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.”

QIB - NIL

NII - NIL

RIIs 0- 0.04 times

Employee Reserved - 0.02 times

Total: 0.01 times

Indications from the grey market point to a muted listing-day gain for Swiggy. Combined with its rich valuation, this could make retail investors wary — similar to how they reacted to Hyundai Motor India’s recent debut. Still, foreign investors are likely to be big buyers, given their optimism about India’s long-term consumption growth, even if Swiggy’s shares don’t come cheap.

Bloomberg report

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“Swiggy operates in a oligopoly market which is at a nascent stage, thus providing enough opportunities for players to create their niche. Swiggy’s innovation DNA is key to success and it could again be at the forefront through its new 10-minute food delivery offering. However, given that the company is still loss making at an aggregate level, and overall profitability may be some time away, we recommend only High Risk investors to ‘Subscribe for long term’. At the upper price band of ₹390, the issue is priced at 7.8x FY24 Market Cap to Sales and looks reasonably priced compared to Zomato which is trading at 17.5x.”

Swiggy plans to utilise the IPO proceeds towards funding investment in the Material Subsidiary, Scootsy, investment in technology and cloud infrastructure, brand marketing and business promotion expenses for enhancing the brand awareness and visibility of its platform, across segments; and for funding inorganic growth through unidentified acquisitions and general corporate purposes.

Up to 75 per cent of issue is reserved for qualified institutional bidders, 15 per cent for non-institutional investors (HNIs) and 10 per cent for retail investors.

The company has also reserved 750,000 shares for employees, which will get a discount of ₹25 from the issue price.

Investors selling in the OFS included 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 VII-A Mauritius and Tencent Cloud Europe BV.

As part of IPO process, food delivery and quick-commerce major Swiggy has collected ₹5,085 crore from anchor investors by allotting 13.04 crore shares to 151 funds at ₹390.

Among the investors who were allocated shares are New World Fund Inc, Government Pension Fund Global, Nomura Funds Ireland Public Limited Company, Fidelity Funds, BlackRock, Allianz Global Investors Fund and Schroder International, according to a circular uploaded on BSE’s website.

Additionally, ICICI Prudential Mutual Fund (MF), SBI Mutual Fund, HDFC Life Insurance Company Ltd, SBI Life Insurance Co. Ltd and ICICI Prudential Life Insurance Company Ltd too were allotted shares in the anchor round.

The much-awaited Swiggy’s initial public offering opens to public today. The IPO targets ₹11,327.43 crore through a combination of fresh issue worth ₹4,499 crore and offer for sale of 17.51 crore shares worth ₹6,828.43 crore.

The IPO, priced at ₹371-390, will close on November 8 and the lot size is 38 shares.

Up to 75 per cent of issue is reserved for qualified institutional bidders, 15 per cent for non-institutional investors (HNIs) and 10 per cent for retail investors.

The company has also reserved 750,000 shares for employees, which will get a discount of ₹25 from the issue price.

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