Swiggy, one of India's leading convenience platforms, offering food delivery and grocery services, has launched its Initial Public Offering (IPO) on November 6, 2024, aiming to raise ₹11,327.42 crore. The IPO consists of a Fresh Issue of ₹4,499 crore and an Offer for Sale (OFS) of ₹6,828.42 crore. Here are some key details:

1. IPO Dates: The Swiggy IPO opened on November 6 and closes on November 8, 2024.
2. Price Band: The price per share is set between ₹371 to ₹390.
3. Lot Size: Investors must apply for a minimum of 38 shares per lot.
4. Market Capitalisation: Based on the upper price band of ₹390, Swiggy's estimated market capitalization is ₹87,298.60 crore.
5. Listing Date: Swiggy shares are expected to list on BSE and NSE on November 13, 2024.
6. Anchor Investors: Swiggy raised ₹5,085.02 crore from anchor investors, securing early support for its IPO.

IPO Objectives and Fund Allocation

Swiggy’s Fresh Issue proceeds will primarily fund its expansion and growth strategy, with objectives focused on building out infrastructure and strengthening its market position. Here’s a breakdown of the key areas:

1. Debt Repayment: A portion of ₹1,648 million will go toward repayment of its subsidiary, Scootsy's borrowings.
2. Expansion of Dark Stores: ₹7,554 million is allocated to expanding Swiggy’s Quick Commerce network, specifically its dark store operations.
3. Lease Payments for Dark Stores: An additional ₹4,233 million will be used for leasing and licensing dark store locations.
4. Technology and Cloud Infrastructure: Swiggy will invest ₹7,034 million in enhancing its technology platform and cloud infrastructure to improve operational efficiency.
5. Brand Promotion: ₹11,153 million will go toward brand marketing and increasing platform visibility across its service segments.
6. Inorganic Growth: The remainder will be set aside for acquisitions and general corporate purposes.

Swiggy’s Financial Performance

Swiggy has witnessed fluctuating revenues and profitability in recent years. Here’s a summary of the company’s key financial metrics:

• Revenue: Swiggy’s revenue for FY2024 was ₹61,197.77 million, down from ₹87,144.53 million in FY2023 and ₹116,343.49 million in FY2022.
• EBITDA: For FY2024, Swiggy’s EBITDA stood at a negative ₹32,337.62 million, indicating losses though improved from FY2023’s negative ₹39,103.37 million.
• Net Profit (PAT): Swiggy recorded a net loss of ₹22,559.50 million for FY2024, down from FY2023’s loss of ₹41,921.73 million, showing a positive trend in profitability.

The pre-issue EPS stands at ₹-10.70, while the post-issue EPS is estimated at ₹10.07, with a Return on Equity (RoE) of -30.16% for FY2024, reflecting the company's ongoing operational losses.

Valuation and Investment Analysis

Swiggy’s IPO is priced at a P/E ratio of -38.72x, while the industry P/E ratio is considerably higher at 634.50x. Given Swiggy’s current financial standing, the IPO valuation appears high, as Swiggy’s negative EBITDA and RoE suggest that the company is not yet profitable.

Swiggy’s IPO Grey Market Premium (GMP) shows no premium, indicating minimal enthusiasm among grey market investors. This could reflect caution due to Swiggy's financial performance and high valuation.

Swiggy IPO Subscription Status

As of 12:20 PM on November 7, 2024, Swiggy’s IPO had been subscribed 0.24 times on its second day, suggesting a cautious response from investors. Investors can track real-time updates on the BSE website.

Allotment and Listing Information

Swiggy’s IPO allotment is scheduled for November 11, 2024. Investors can check their allotment status through the registrar’s (Link Intime India) website. Shares are expected to list on November 13, 2024 on BSE and NSE, with any remaining refunds processed by November 12.

Pros and Cons of Swiggy IPO Investment

Pros:

• Swiggy’s position as a leading convenience platform in India with diversified offerings (food delivery, Instamart) and a large user base.
• Strong brand presence and potential for growth in Quick Commerce and digital grocery delivery, with a significant focus on technological and infrastructure expansion.

Cons:

• High losses and negative EBITDA over the past few years, with uncertain profitability in the near future.
• High valuation relative to industry standards, which may pose risks for long-term investors.
• Limited visibility in grey market trading, suggesting that the stock may not see substantial listing gains.

Conclusion: Investment Recommendation

Swiggy’s IPO offers investors an opportunity to buy into one of India’s largest convenience tech platforms. However, the company’s negative financial metrics and high valuation indicate that Swiggy still has a way to go before achieving profitability. Given the current financial standing and lack of visible grey market interest, investors may choose to approach this IPO with caution. The recommendation leans towards avoiding the IPO for short-term listing gains, though long-term investors may consider it if they believe in Swiggy’s growth potential in India’s evolving convenience economy.

The Upcoming IPOs in this week and coming weeks are Archit Nuwood Industries Limited, Neelam Lines and Garments, Rosmerta Digital, NTPC Green, Avanse Financial and Zinka Logistics.

The Current active IPO is Sagility India Limited, Swiggy, ACME Solar Holdings and Niva Bupa Health .

For more insights into financial trends , visit our Top News Headlines. You can also explore investment opportunities in the market and apply for upcoming IPOs through our Best IPO to Apply Now section.