All Eyes on Swiggy IPO as it Sets to Open for Subscription on November 6 According to stock market observers, Swiggy on Monday, commanded a grey market premium of INR 22 per share, indicating that its shares are trading higher by INR 22 apiece at INR 412 per share, higher than the issue price of INR 390 per share.
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As Swiggy is all set to open its initial public offering (IPO) this week on Wednesday, November 6, all eyes are on the food delivery startup. The choppy markets are further adding to the fervour. While the BSE Sensex plunged over 940 points to close at INR 78,782.24, Nifty50 closed down 300 points at 23,995.35.
The announcement of the mega INR 11,000-crore IPO has also sparked comparisons with its arch rival Zomato. Investors are curious to know which of the two will be a better proposition in their portfolio.
Zomato listed at a premium of about 66 per cent closing at INR 125.85 on the BSE on July 23, 2021, above its IPO price band of INR 72-INR 76. It is currently trading at INR 241.15 on the BSE.
Swiggy and Zomato have a duopoly in the market. Although Zomato's food business trades at a greater valuation, indicating greater market confidence, both companies have comparable take rates. Swiggy may close the value gap if it performs well after going public and increases its market share and profitability. Also, it will be crucial for Zomato to continue performing well in the face of this fresh competition, analysts said.
"Swiggy needs to strategically leverage the proceeds from its IPO to narrow the gap in market share with Zomato. Expanding its services into new segments and cities will be vital. Swiggy also needs to accelerate Instamart to compete more strongly with Blinkit in quick commerce. This can be done by expanding its network of dark stores, optimising logistics for faster delivery, increasing its product range, and enhancing customer engagement through strategic partnerships and technology integration," according to analysts at Kotak Securities.
The issue's price band has been set at INR 371 to INR 390 per share. The issue combines a fresh issue of 11.54 crore shares and an offer for sale (OFS) of 17.51 crore shares. From the sale of fresh issue of shares, the company will raise INR 4,499 crore.
The minimum lot size for an application is 38 shares. With the issue's upper price band at INR 390, the minimum amount of investment required by retail investors is INR 14,820.
According to stock market observers, Swiggy on Monday, commanded a grey market premium of INR 22 per share, indicating that its shares are trading higher by INR 22 apiece at INR 412 per share, higher than the issue price of INR 390 per share.
Swiggy reported a net loss of INR 2,350.24 crore on revenues of INR 11,634.35 crore for the fiscal ended March 2024. For three months ended June 2024, the company posted a net loss of INR 611.01 crore and revenues of INR 3,310.11 crore.
