IPO-bound Swiggy slashes valuation target by 10-16% to $12.5-$13.5 billion over market volatility: Report

Swiggy IPO: Food delivery giant Swiggy aims internally for a company valuation of $12.5 billion-13.5 billion for its upcoming initial public offering (IPO), cutting its target by 10-16 per cent due to market volatility. According to news agency Reuters,  Swiggy was earlier targeting a $15 billion valuation for its $1.4 billion November IPO, India's second-biggest stock offering in its primary market, behind Hyundai Motor India's market debut this week.

According to Reuters, recent market volatility and a correction in the Indian stock markets have prompted Swiggy to consider a lower valuation for its upcoming public issue. The leading food delivery startup wants to ensure "a lot of value is left on the table" for the investors who bid on the issue.

Also Read: Swiggy IPO: From financials to key risks, here are 10 key things to know from updated DRHP-I

The domestic equity benchmark Nifty 50 index is on course to log four straight weeks of losses, dropping by as much as 7.15 per cent from record highs hit on September 27 due to persistent selling by foreign investors. 

Hyundai India shares fell 7.2 per cent on their market debut after retail investors gave a lukewarm response during the bidding period amid concerns about a lofty valuation and slowdown in the auto industry. Despite recent jitters, India's IPO market has been buoyant with 270 companies raising $12.57 billion this year, eclipsing the $7.4 billion raised in 2023.

Swiggy IPO details

Swiggy, backed by SoftBank and Prosus, is expected to list on the bourses on November 13 and open the IPO for subscriptions the week before that, though the date could change slightly. Swiggy plans to conduct roadshows for its stock offering in many Indian cities starting October 30.

Also Read: Swiggy IPO: Top 10 things to know about the public offering

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. 

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.

Also Read: Swiggy launches ‘Swiggy Seal’ in 650 cities — what does this mean for customers?

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 as opposed to ₹8,264.59 crore and ₹5,704.89 crore the year prior.

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. 

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. Since then, its valuation has fluctuated, but Swiggy is now targeting a $10 billion valuation for its IPO.