Swiggy’s Upcoming IPO: A New Chapter in Food Delivery Competition
Swiggy, the renowned food delivery service, is set to make waves not just in the food industry but also in the stock market with its impending IPO. After years of intense rivalry with Zomato in the food delivery sector, Swiggy has officially filed its draft with the Securities and Exchange Board of India (SEBI) for an Initial Public Offering (IPO) aiming to raise over ₹10,000 crore. This IPO will include a fresh issue of shares worth ₹3,750 crore, along with an Offer for Sale (OFS) from promoters worth ₹6,500 crore.
Celebrity Investors and Backing from Venture Capitalists
Even before its IPO, Swiggy has attracted significant investment from venture capital firms and high-profile celebrities. Notable names like Amitabh Bachchan, Madhuri Dixit, Karan Johar, Rahul Dravid, Zaheer Khan, and Rohan Bopanna have thrown their weight behind the company, boosting its brand visibility and credibility. Additionally, major global investors such as SoftBank Vision Fund, Prosus, Accel, and Elevation Capital have backed Swiggy, underscoring the confidence in its growth potential.
The Journey of Swiggy
Founded in 2014 by Sriharsha Majeti, Nandan Reddy, and Rahul Jaimini, Swiggy started its operations focusing solely on food delivery. Over the years, the company has evolved to include hyper-local delivery services, thus expanding its product portfolio. With partnerships established with 150,000 restaurants nationwide, Swiggy continues to enjoy a strong customer base across both major and minor cities in India, illustrating its effective growth and market penetration.
Financial Performance and Loss Reduction
Swiggy has faced losses in the past; however, recent trends show a decline in losses. The company reported a revenue increase of 36% to ₹11,247 crore for the fiscal year 2024. Despite incurring a loss of ₹2,350 crore, this figure stands in comparison to the ₹4,179 crore loss reported in the previous fiscal year (FY23). The management’s focus on cost-control measures and increased profitability before the IPO has significantly improved Swiggy’s financial outlook.
Head-to-Head with Zomato
In the competitive landscape of food delivery, Swiggy finds itself directly rivaling Zomato. Zomato achieved profitability in FY24 with revenues of ₹12,114 crore and a net profit of ₹351 crore. Since its IPO launch in 2021, Zomato has also expanded its services into Quick Commerce following its acquisition of Blinkit. This diversification has enabled Zomato to maintain its status as a major player in the industry, with a market capitalization exceeding $20 billion. As Swiggy’s IPO approaches, investors will eagerly compare the two companies, particularly in terms of leadership in India’s ₹2 lakh crore food delivery market, where they collectively command around 90% of the share.
Projected Valuation and Future Plans
The upcoming IPO is not just a financial maneuver; it is also a strategic step towards Swiggy’s further expansion. The funds raised are expected to fuel growth initiatives and extend its market penetration. Swiggy’s valuation stood at approximately $10.7 billion in 2022, and after the IPO, estimates suggest it could rise to between $10 billion and $13 billion. The competition remains fierce as Swiggy continues to vie with other giants such as BigBasket and Flipkart in addition to Zomato.
Conclusion
As Swiggy prepares for its IPO, the stage is set for an exciting chapter in the food delivery arena. With significant backing from celebrity investors, robust financial performance, and a determined approach to reduce losses, Swiggy is not only ready to go public but also to solidify its position as a leader in the market. The coming months will be crucial as both Swiggy and Zomato aim to establish dominance over India’s ever-expanding food delivery service sector.
