Swiggy’s IPO Journey: A Significant Milestone
Swiggy, one of India’s leading food delivery platforms, has received the green light for its Initial Public Offering (IPO) from the Securities and Exchange Board of India (SEBI). This approval comes as part of Swiggy’s updated draft proposal and paves the way for an IPO that is anticipated to be among the largest in the country, with an estimated size of ₹10,414 crore. This monumental IPO comprises the issuance of new shares along with an Offer for Sale (OFS) component.
Overview of the IPO Size
The Swiggy IPO will include the issuance of new shares worth ₹3,750 crore, while the OFS will involve the sale of shares valued at approximately ₹6,664 crore. Notably, the company may choose to enhance the total issue size by ₹1,250 crore, potentially bringing the overall IPO size to ₹11,644 crore.
Breakdown of the IPO Funds
| Component | Amount (₹ crore) |
|---|---|
| New Shares Issuance | 3,750 |
| Offer for Sale | 6,664 |
| Total IPO Size | 10,414 |
| Potential Increase | 1,250 |
| New Total Size (if increased) | 11,644 |
Utilization of IPO Proceeds
Swiggy plans to channel the ₹3,750 crore raised through the IPO towards several strategic initiatives. The funds will primarily be allocated for:
- Repaying outstanding loans.
- Expanding operations in the quick commerce sector.
- Strengthening the Swiggy brand presence.
- Investing ₹586 crore in technology enhancements and cloud infrastructure.
- Using ₹137 crore specifically for loan repayment.
Offer for Sale (OFS) Details
The OFS component will feature participation from several prominent investors, including Prosus, Accel India, Alpha Wave, Coatue PE Asia, DST, Elevation Capital, Norwest Venture, and Tencent. Prosus is set to be the most significant seller, offloading approximately 11.78 crore shares, which constitutes about 64% of the total OFS.
Investor Optimism and Valuation
Interestingly, SoftBank’s Vision Fund, a major investor, has chosen not to divest its stake during this round, raising hopes for a strong post-listing performance of Swiggy’s shares. The expected valuation for Swiggy upon IPO is projected to range between $10 billion to $13 billion. This valuation falls short compared to Zomato’s valuation of approximately $30 billion, reflecting the competitive dynamics within the food delivery market.
Share Pricing Insights
As of now, Swiggy has not finalized the share price for the IPO. However, in the unofficial market, shares are currently trading within the range of ₹330-₹350. Market watchers anticipate a potential price increase as the IPO date draws nearer.
Financial Performance Snapshot
In its latest financial disclosures, Swiggy reported an 8% increase in losses, totaling ₹611 crore in Q1 FY25. This is compared to a loss of ₹564 crore during the same quarter the previous year. Nevertheless, the company’s revenue for the June quarter reached ₹3,222.2 crore, marking a significant 35% growth year-on-year.
In summary, Swiggy’s upcoming IPO represents a critical juncture for the company, showcasing its growth trajectory and the evolving landscape of the food delivery industry in India. With substantial backing from significant investors and a clear plan for the utilization of the raised funds, Swiggy’s IPO is poised to capture the attention of the market and investors alike.
