Swiggy, a leading new-age technology-driven convenience platform, has become a household name in India, offering services ranging from food delivery to grocery and household items through its Instamart feature. The company is now set to go public through its Initial Public Offering (IPO), which opens for subscription on November 6, 2024, and closes on November 8, 2024. This article provides a comprehensive breakdown of the IPO, including its pricing, subscription status, financials, objectives, and expert review.

IPO Overview

Swiggy's IPO is a book-built issue amounting to ₹11,327.42 crore, with a fresh issue of 1,153.58 lakh shares worth ₹4,499 crore and an Offer for Sale (OFS) of 1,750.87 lakh shares totaling ₹6,828.42 crore. The price band for the IPO has been set at ₹371 to ₹390 per share, which will provide a market capitalization of ₹87,298.60 crore at the upper price band.

The lot size for the IPO is 38 shares, and retail investors need to invest a minimum of ₹14,820. High-net-worth individuals (HNIs) are required to invest a minimum of ₹2,07,480 for 14 lots (532 shares).

IPO Objectives and Use of Proceeds

The funds raised through the fresh issue will be used for several key initiatives, including:

1. ₹1,648 million will be invested in its subsidiary, Scootsy, for repayment and pre-payment of borrowings.
2. ₹11,787 million will go into expanding Scootsy’s Dark Store network and making lease/license payments for these stores.
3. ₹7,034 million will be allocated for investment in technology and cloud infrastructure.
4. ₹11,153 million will be used for brand marketing and promoting the platform across its various segments.
5. Funds will also be used for inorganic growth through acquisitions and general corporate purposes.

Financial Performance and Valuation

Swiggy’s revenue for the fiscal year 2024 stood at ₹61,197.77 million, showing a decline from ₹87,144.53 million in FY23. The company posted a negative EBITDA for FY24 of ₹-32,337.62 million, continuing its trend from previous years. Additionally, the Profit After Tax (PAT) was also negative, at ₹-22,559.50 million.

For the Swiggy IPO, the company is offering shares at a pre-issue EPS of ₹-10.70, and a post-issue EPS of ₹10.07. The P/E ratio stands at a negative -36.44x pre-issue and -38.72x post-issue, far lower than the industry’s P/E ratio of 634.50x. This suggests that while the valuation might seem attractive, it reflects the company’s challenging financial position.

Grey Market Premium and Market Sentiment

The Grey Market Premium (GMP) of the Swiggy IPO is currently ₹0, indicating neutral market sentiment. This lack of premium suggests uncertainty regarding the company’s short-term listing gains. Investors should exercise caution as no trading is done on the basis of GMP, and such figures are generally speculative.

IPO Subscription and Allotment Process

The IPO opened on November 6, 2024, and will close on November 8, 2024. The allotment date is scheduled for November 11, 2024, with the shares set to be listed on the BSE and NSE on November 13, 2024.

To check the allotment status, investors can visit the registrar’s website, select Swiggy IPO from the dropdown list, and enter their application number, PAN, or DP Client ID.

Swiggy IPO Anchor Investors

Swiggy has raised ₹5,085.02 crore from anchor investors, with 13,03,85,211 equity shares allocated at the ₹390 per share price. While this demonstrates confidence from institutional investors, it doesn’t guarantee that the IPO will perform strongly on listing day.

Recommendation

Based on the company’s financial performance, negative earnings, and valuation concerns, Swiggy’s IPO appears to be fully priced. The negative GMP and lack of profitability may indicate limited short-term gains for investors. Given these factors, we recommend avoiding the Swiggy IPO for listing gains or long-term investments.

Final Thoughts

Swiggy’s IPO offers a unique opportunity to invest in a leading convenience platform in India, but its challenging financials and negative market sentiment suggest that investors should tread cautiously. While the company is a market leader in its segment, the IPO may not be suitable for those seeking quick returns or long-term growth in the near future.

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