The much-anticipated Swiggy IPO is now on the horizon, with the company having received the green light from the Securities and Exchange Board of India (SEBI) for its updated draft. This IPO is set to be one of India’s largest, with a potential issue size of Rs 10,414 crore. Here’s a breakdown of the key details:
1. Size of the IPO: A Major Public Offering
Swiggy is planning to raise Rs 10,414 crore through its IPO. This will include new shares worth Rs 3,750 crore and an Offer for Sale (OFS) component of about Rs 6,664 crore. The IPO size may further increase to Rs 11,644 crore, depending on demand, as the company has the option to increase the issue by Rs 1,250 crore.
2. Fund Utilization: Focus on Expansion and Debt Repayment
Swiggy plans to use the Rs 3,750 crore raised through the fresh issue for several strategic purposes:
- Debt repayment: Rs 137 crore will be used to clear outstanding loans.
- Quick commerce expansion: A significant portion will go into scaling up its quick delivery business, which has gained momentum in recent years.
- Brand strengthening: The company will also work on enhancing the Swiggy brand across markets.
- Technology investment: About Rs 586 crore will be spent on technology upgrades and cloud infrastructure.
3. Stakeholders Selling Shares in the OFS
Several major investors, including Prosus, Accel India, Alpha Wave, Coatue PE Asia, DST, Elevation Capital, Norwest Venture, and Tencent, are selling their stakes in the company through the Offer for Sale. Notably, Prosus is offloading 11.78 crore shares, making up 64% of the total OFS.
4. Major Investor Retaining Stake
The Softbank Vision Fund, one of Swiggy’s prominent investors, will not be selling its shares in the IPO. This decision could be a positive indicator for potential investors, as it shows confidence in Swiggy’s long-term growth prospects.
5. Valuation: Comparing with Rivals
While Swiggy’s final valuation will be determined by the IPO price band, early estimates suggest that the company may be valued between $10 to $13 billion. This is notably lower than its primary competitor Zomato, which has a current valuation of about $30 billion.
6. Unofficial Market Buzz: Share Price Speculation
Although Swiggy has yet to announce its IPO share price, shares are reportedly trading in the Rs 330-350 range in the grey market. As the IPO date approaches, these prices may rise, reflecting growing investor interest.
7. Financial Performance: Challenges and Growth
In terms of financials, Swiggy reported a loss of Rs 611 crore in Q1FY25, which is 8% higher compared to its Rs 564 crore loss in the same period last year. However, Swiggy’s revenue increased by 35% year-on-year, reaching Rs 3,222.2 crore in the June 2024 quarter. Despite the widening losses, the company continues to show robust revenue growth.
With Swiggy’s IPO drawing near, investors are closely watching for more details about the price band and exact dates, eager to participate in one of the largest IPOs in the Indian food delivery market.
