Shares of food delivery and grocery major Swiggy will be listed at the bourses today. The company has fixed the IPO price as ₹370, at the upper end of the price band ₹371-390.

The issue, which struggled on the first two days, sailed through with an oversubscription of 3.60 times, thanks to QIB investors. Given the faltering of large IPOs such as LIC and Hyundai India, marketmen expect only a muted listing from Swiggy.

The qualified institutional buyers (QIBs) portion was booked 6.02 times—the highest, and the retail investor’s portion was subscribed 1.14 times. The employees’ book was subscribed 1.65 times. However, wealthy individual investors (NIIs) remain lukewarm to the issue as the portion reserved for them remained undersubscribed at 0.41 times. 

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said: “We believe the majority of the investor especially NII’s & retail stayed back on few reason like Negative cash flow business model followed by concern on high competition and ongoing negative market mood. Considering low subscription demand from NII’s & Retail investors followed by market sentiments, there is a very high possibility of flat to negative listing in the range of +or - 5-10% on its issue price.”

The Rs. 11,300-crore IPO comprised a fresh capital of ₹4,499 crore and an offer for sale (OFS) of 17.51 shares worth ₹ 6,828 crore.

The food delivery major raised ₹5,085 crore from institutional investors through the anchor book. 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. 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 were also allotted shares in the anchor round.

Swiggy’s upper price band valuation is estimated at around ₹95,000 crore. In comparison, rival Zomato, which went public in July 2021, currently has a market valuation of ₹2.25 lakh crore.

Swiggy plans to use the IPO proceeds to fund investments in the Material Subsidiary, Scootsy, technology and cloud infrastructure investments, brand marketing and business promotion expenses to enhance the brand awareness and visibility of its platform across segments, and inorganic growth through unidentified acquisitions and general corporate purposes.

“Post Listing: For allotted investors, one should not expect any kind of listing gains. Hence, only risky investors should consider the company to HOLD FOR LONG TREM despite knowing short term volatility and competitive pressures in the sector. For non-allottees, we advise to wait and watch for the price to settle and revisit the space with better discounted opportunity,” said Tapse.

Swiggy is an online food delivery platform that emerged in India in 2014. It offers a convenient solution for ordering food from various restaurants.

The company operates five business units: Food Delivery, out-of-home consumption, including restaurant visits and events; Quick Commerce, offering on-demand delivery of groceries and household items; supply chain and distribution, providing B2B deliveries, warehousing, logistics, and distribution for wholesalers and retailers; and platform innovation, introducing new services like Swiggy Genie and Swiggy Minis.

Kotak Mahindra Capital Company, Citigroup Global Markets India, Jefferies India, Avendus Capital, J.P. Morgan India, BoFA Securities India, and ICICI Securities were the book-running lead managers of the IPO.

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