IPO-bound Swiggy sets valuation target at $11.3 billion to aid retail participation; Issue to open post Nov 6

Swiggy IPO: Food delivery giant Swiggy plans to list at a valuation of $11.3 billion for its upcoming initial public offering (IPO), a person familiar with the development told Mint on the condition of anonymity. The earlier plan was to list at a higher $15 billion valuation or above. However, Swiggy has slashed its IPO valuation target due to the current volatility in the Indian stock market and to ensure greater retail investors' participation.

The last private market valuation was when Invesco became an investor at $10.3 billion. A person familiar with the company told Mint that the Swiggy IPO issue is set to open for subscription after November 6, 2024. More than 30 foreign investors are expected to anchor the book. A Swiggy spokesperson did not immediately respond to a request for comment.

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Swiggy's listed peers amid market volatility

Swiggy competes with Zomato in India's online restaurant and cafe food delivery sector. Zomato is also Swiggy's listed peer company with a P/E of 742.50. Both have made major bets on the new so-called quick commerce boom, in which groceries and other products are delivered in 10 minutes.

The Indian stock market is in a correction phase due to persistent foreign fund outflows, high valuations, and geopolitical conflicts. The domestic equity benchmarks Nifty 50 and Sensex logged their longest weekly losing run in 14 months, intensifying a broad-based selloff. Lacklustre corporate earnings further bogged down the sentiment, compelling indices to enter the bear market just a few days ahead of Diwali and the onset of Samvat 2081.

Amid the current market scenario, Swiggy's peer Zomato also witnessed a sharp correction in its stock price. On October 21, Zomato's stock price was ₹265.70 on the BSE. Throughout the week, the new-age internet stock shed over five per cent and slipped to ₹253.85 on the BSE in five straight market sessions. The coming week also invites market volatility due to the scheduled monthly derivates expiry on Thursday, October 31.

Zomato’s market capitalization hovers at ₹2,24,310.54 crore, surpassing Swiggy's projected $11.3 valuation. Zomato's food delivery service contributes 46.17 per cent of its revenue, with extra income streams from its B2B hyperpure business and Blinkit. The recent acquisition of Paytm’s ticketing business further broadens its service portfolio.

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Swiggy IPO details

Swiggy, backed by SoftBank and Prosus, is expected to list on the bourses in November 2024. The online food delivery giant plans to conduct roadshows for its stock offering in many Indian cities starting October 30. The proposed IPO includes a new issuance of equity shares valued at ₹3,750 crore and the sale of 18.52 crore existing shareholders' equity shares through an offer-for-sale (OFS), as stated in the updated draft red herring prospectus-I (UDRHP-I). 

Swiggy is considering raising funds in a pre-IPO round, and if successful, the size of the new issuance will be adjusted accordingly. The IPO includes segments for qualified institutional buyers (QIBs), anchor investors, and mutual funds. Non-institutional buyers will also have opportunities, with one-third of the allocation set for bidders applying between ₹2 to ₹10 lakh and the rest for those applying for more than ₹10 lakh, alongside a retail portion.

According to the UDRHP, the IPO's book-running lead managers (BRLM) include Kotak Mahindra Capital Company, Citigroup Global Markets India Private Ltd, Jefferies India Private Ltd, and Avendus Capital Private Ltd. Link Intime India Private Ltd serves as the issue's registrar.

Also Read: Swiggy’s new feature lets NRIs order food, articles, and more for loved ones in India; here’s how

Swiggy's confidential offer document was accepted by the capital markets regulator, the Securities and Exchange Board of India (SEBI), in September, and now the draft file has been amended. The business submitted its offer document on April 30 using the confidential pre-filing process.

With negative cash flows from operations, Swiggy has experienced net losses for the year since its formation. As of March 31, Swiggy's losses for the fiscal year have dropped to ₹2,350.24 crore from ₹4,179.30 crore in FY23 and ₹3,628.89 crore in FY22. During the same time last year, operating revenue was ₹11,247.39 crore compared to ₹8,264.59 crore and ₹5,704.89 crore the year prior.

According to Tracxn, Swiggy has raised approximately $3.62 billion across 15 funding rounds, with backing from over 50 institutional investors and a few angel investors. In 2022, the company secured $700 million in a round led by Invesco, doubling its valuation to $10 billion. Previously, Swiggy slashed its IPO valuation target by 10-16 per cent to $12.5-$13.5 billion.