Swiggy IPO receives tepid response on day 1 of issue; Issue booked 12%, retail investors bid highest: Latest GMP here

Swiggy IPO: The initial public offering (IPO) of food and grocery delivery giant Swiggy Ltd received lukewarm from investors and was subscribed 12 per cent on the first day of subscription. The mainboard IPO opened for subscription for all groups of bidders on Wednesday, November 6, 2024, and close on Friday, November 8, 2024.

Swiggy aims to raise ₹11,327 crore from the IPO. Swiggy IPO has reserved not more than 30 per cent of the shares in the public issue for qualified institutional buyers (QIBs), not less than 15 per cent for non-institutional institutional investors (NIIs), and not less than 10 per cent of the offer for retail investors.

Follow Live Updates: Swiggy IPO Live: Day 1 subscription stands at 12%; retail portion booked 54%

Swiggy IPO Subscription Status

On the first day of issue, Swiggy IPO was subscribed 12 per cent. The portion reserved for QIBs was left unsubscribed on the first day, the portion reserved for NIIs was booked 0.06 per cent, and the portion reserved for retail investors was booked 54 per cent. The IPO received 1,89,80,620 share applications against 16,01,09,703 shares offered on Wednesday. 

Swiggy IPO Latest GMP

Swiggy IPO GMP today is +9.50. This indicates Swiggy share price was trading at a premium of ₹9.50 in the grey market, according to investorgain.com. Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Swiggy share price is indicated at ₹399.5 apiece, which is 2.44 per cent higher than the IPO price of ₹390.

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

According to the grey market trends observed over the past nine sessions, today's IPO GMP is showing a downward movement, indicating a subdued listing. The minimum GMP recorded is Re 0, while the maximum stands at ₹25, according to experts from investorgain.com. 'Grey market premium' indicates investors' readiness to pay more than the issue price.

Swiggy IPO Details

Swiggy IPO is a book built issue of ₹11,327.43 crore. The public issue is a combination of fresh issue of 11.54 crore shares aggregating to ₹4,499.00 crore and offer for sale (OFS) of 17.51 crore shares aggregating to ₹6,828.43 crore from the company's selling shareholders. 

The allotment for the Swiggy IPO is expected to be finalized on Monday, November 11, 2024. Swiggy IPO will list on BSE, NSE with tentative listing date fixed as Wednesday, November 13, 2024. Swiggy IPO price band is set at ₹371 to ₹390 per share. The minimum lot size for an application is 38 shares.

Also Read: Swiggy IPO: Price band, GMP, dates, among 10 things to know before subscribing to the issue

In the OFS, the shareholders selling their stakes include Accel India IV (Mauritius) Ltd, Apoletto Asia Ltd, Alpha Wave Ventures, LP, Coatue PE Asia XI LLC, DST EuroAsia V B.V, Elevation Capital V Ltd, Inspired Elite Investments Ltd, MIH India Food Holdings B.V, Norwest Venture Partners VIIA-Mauritius, and Tencent Cloud Europe B.V.

The issue includes a reservation of up to 750,000 shares for employees offered at a discount of ₹25 to the issue price. Swiggy intends to use the net proceeds to invest in its primary subsidiary, Scootsy, fulfil its debt obligations, expand its network of dark stores in the quick commerce industry, and pay for lease or licensing fees associated with the dark stores.

It plans to invest in technology and cloud-based systems. The organization also stated that it will dedicate resources to brand marketing and associated promotional costs. Furthermore, it aims to reserve funds to facilitate growth through future acquisitions that have not been detailed, along with resources for overall corporate requirements.

Also Read: Swiggy IPO set to cook up a storm for early backers, deliver up to 35x returns

Kotak Mahindra Capital Company Ltd, Citigroup Global Markets India Private Ltd, Jefferies India Private Ltd, Avendus Capital Pvt Ltd, J.P. Morgan India Private Ltd, Bofa Securities India Ltd, and ICICI Securities Ltd are the lead managers overseeing the Swiggy IPO, whereas Link Intime India Private Ltd serves as the registrar for the offering.

Swiggy Company Details

Swiggy is the online food and grocery delivery company and among the first hyperlocal commerce platforms. On the financial front, the company has reported losses for the last three fiscals on a consolidated basis.

For the financial year ending March 2024, Swiggy reported a net loss of ₹2,350.24 crore upon a revenue of ₹11,634.35 crore. For three months ending June 2024, the company posted a net loss of 611.01 crore and a revenue of ₹3,310.11 crore.

Also Read: Swiggy IPO to open for subscription on November 6; 10 things to know from RHP

Swiggy offers its users a user-friendly platform accessible through one app to explore, choose, order, and pay for food (Food Delivery), groceries and household items (Instamart), and have their orders delivered to their homes through a network of on-demand delivery partners.

Swiggy IPO Review

“On valuation parse at the upper price band of Rs. 390, the issue is asking for a Market cap of ₹87,299 crore, which seems fairly valued to peers. We have valued the company on the basis of Market cap to sales due to the loss status as of now, so on this basis Swiggy's offer is valued at 7.8x Market cap to sales which is fairly valued discounting to its competitor Zomato,” said Rajan Shinde, Research Analyst, Mehta Equities Ltd.

"We believe Swiggy has been more efficient in customer acquisition than its competitor Zomato, driven by its unified app model, which enhances cost efficiency and supports user growth. The company’s expansion into Tier 2 and Tier 3 cities, along with its inclusion of groceries and medicines, bolsters its path to profitability. 

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

Given its consistent innovation and strategic expansion, we believe Swiggy’s is well-positioned for sustained growth. Making it a compelling opportunity for investors seeking exposure in the evolving hyperlocal commerce space. Hence, by looking at all attributes we recommend investors to “Subscribe” the Swiggy Ltd for long term perspective," added Shinde.

According to domestic brokerage Motilal Oswal Financial Services Ltd, Swiggy operates in a oligopoly market which is at a nascent stage, thus providing enough opportunities for players to create their niche. Swiggy’s innovation DNA is key to success and it could again be at the forefront through its new 10-minute food delivery offering. 

“However, given that the company is still loss making at an aggregate level, and overall profitability may be some time away, we recommend only High Risk investors to ‘Subscribe for long term’. At the upper price band of ₹390, the issue is priced at 7.8x FY24 Market Cap to Sales and looks reasonably priced compared to Zomato which is trading at 17.5x,” said the brokerage.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.