The company’s shares were trading at a GMP of Rs 12 in the unlisted market. This indicates a marginal premium of 3% over the issue price.
Swiggy brought the IPO at a lower valuation of $11.3 billion against its earlier target of around $15 billion. The company plans to raise around Rs 11,300 crore through the issue. The issue comprises a fresh equity sale of Rs 4,499 crore with an offer for sale (OFS) for 17,50,87,963 equity shares.
Swiggy IPO price band
The company has fixed the price band at Rs 371-390 per share, where investors can bid for 38 shares in one lot and in multiples thereafter.
Swiggy IPO GMP
Ahead of the issue opening, the company’s shares were trading at a GMP of Rs 12 in the unlisted market. This indicates a marginal premium of 3% over the issue price.
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Swiggy IPO review
Analysts were mixed on the IPO given the company’s current financial status, competitive pressures and valuations. However, investors can subscribe to the issue based on the long-term potential given the scope for growth in the food delivery space.”Swiggy, at an upper price band of Rs 390, is valued at Price/Sales, EV/Sales and P/BV multiple of 7.8x/7.3x/7.1x, respectively, of its FY24 financials on post issue capital. While comparing with Zomato, the issue appears to be fairly priced on all these parameters. We recommend investors to subscribe to the issue for a long-term investment perspective,” said SBI Securities.
“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 Rs 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,” said Motilal Oswal.
“At the upper price band of Rs 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,” said Geojit.
Other details
The food delivery company proposes to use the IPO proceeds for investment in its material subsidiary Scootsy, investment in technology and cloud infrastructure and also for brand marketing and business promotion. This will be done over a four to five-year period.
Swiggy competes with Zomato in India’s online restaurant and food delivery sector, and both have made major bets on a boom in “quick-commerce,” where groceries and other products are delivered in 10 minutes.
The company has incurred net losses in each year since incorporation and have negative cash flows from operations.
For the financial year ended March 2024, the loss stood at Rs 2,350 crore versus Rs 4,179 crore in FY23 and Rs 3,628 crore in FY22. Revenue from operations in the said period, however, doubled to Rs 11,247 crore in FY24 from Rs 5,704 crore in FY22.
Kotak Mahindra Capital, Citigroup Global Markets, Jefferies India and Avendus Capital are the book-running lead managers, while the registrar to the issue is Link Intime India.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
