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Swiggy Limited provides its users with an easy-to-use platform that they can access via a single app to search, select, order, and pay for food (Food Delivery), grocery and household goods (Instamart) and have orders delivered to their homes via an on-demand delivery partner network. Swiggy IPO intends to raise Rs 11,327.43 crores. The issue is a combination of fresh issue aggregating to Rs 4,499.00 crores and offer for sale aggregating to Rs 6,828.43 crores.

About Swiggy Limited:

• Incorporated on December 26, 2013, Swiggy is a new-age, consumer-first technology company.
• It is offering users an easy-to-use convenience platform, accessible through a unified app – to browse, select, order and pay for food (“Food Delivery”), grocery and household items (“Instamart”), and have their orders delivered to their doorstep through their on-demand delivery partner network..
• Their platform can be used to make restaurant reservations (“Dineout”) and for events bookings (“SteppinOut”), avail product pick-up/ drop-off services (“Genie”) and engage in other hyperlocal commerce activities (Swiggy Minis, among others).
• Swiggy has successfully launched Food Delivery in 2014 and Quick Commerce in 2020.
• Swiggy augments the value proposition to users through their membership programme called “Swiggy One” providing discounts and offers; in-app payment solutions like digital wallet “Swiggy Money” (a pre-paid payments instrument), “Swiggy UPI”, and Swiggy-HDFC Bank credit card for additional benefits.

Financials : Swiggy IPO

Anchor: Swiggy IPO

• Swiggy IPO has raised Rs 5,085 crore from anchor investors for its upcoming IPO. Around 56% of the anchor book has gone to domestic institutional investors, including mutual funds which include names like SBI Mutual Fund, ICICI Prudential, Axis Mutual Fund, Nippon India, and HDFC Life. Capital Group, Fidelity and Blackrock, Marshall Wace and Citadel and sovereign wealth funds like Norway’s Norges Investment etc. were also investors in the anchor issue.

Salient Points: Swiggy IPO

• The Indian Online Food Delivery Market grew from Rs 112 bn in CY18 to Rs 640 bn in CY23 at CAGR of ~42%. It is further expected to grow at a CAGR of 17%-22% between CY23-CY28P to reach Rs 1,400-1,700 bn by CY28.
• Swiggy offer its users a convenience platform, accessible through a unified app – to browse, select, order and pay for food, grocery and
• household items, and have their orders delivered to their doorsteps.
• 13% dilution in the IPO. The hose selling shares in the OFS are Accel India IV (Mauritius) Ltd, Apoletto Asia Ltd, Alpha Wave Ventures LP, Coatue PE Asia XI LLC, DST EuroAsia V BV, Elevation Capital V Ltd, Inspired Elite Investments Ltd, MIH India Food Holdings BV, Norwest Venture Partners VII-A Mauritius, and Tencent Cloud Europe BV.
• The largest shareholder, Prosus, which holds about 31% right now, has reduced its OFS component and will hold 25% after the IPO.
• Out of the proceeds from the fresh issue, Rs 164.8 crore will be used for debt repayment of subsidiary Scootsy. Further Rs 1178.7 crore will be invested in Scootsy to expand the dark store network in the quick commerce segment, with Rs 755.4 crore allocated for setting up dark stores and Rs 423.30 crore for lease or license payments.
• From the net proceeds, the company will also invest Rs 703.4 crore in technology and cloud infrastructure, Rs 1115.30 crore for brand marketing and business promotion, and the balance funds will be allocated for inorganic growth and general corporate purposes.
• Swiggy earns revenue from sale of services and sale of goods on their platform. Their revenue from services includes:
  • Commissions that they charge to their restaurant partners and merchant partners for their offerings to them on their platform,
  • Advertising revenue that they earn from restaurant partners, merchant partners
  • Fees that they charge to users and delivery partners for the use of their platform.
  • Subscription revenue that they earn from users for their Swiggy One membership program.
• Swiggy is unique, as it is the only unified app in India that fulfills through its platform all food and related missions of urban users of ordering-in, eating-out and cooking-at-home, as of June 30, 2024.
• Revenue mix

• Monthly Gross Order Value (GOV) per MTU

• On the flip side
  • startup like Ola shares dropped below IPO price in just 3 months, after soaring on listing.
  • Flipkart, Reliance, Big Basket have already entered the quick commerce market.
  • Zomato has taken a lead over it.
• Peers: Zomato.

• Peers: Other Parameters

• Swiggy has a capital turnover ratio of 0.6x. As against this, Zomato’s capital turn is double, at 1.2x and thus better.
• Company’s working capital requirements have reduced from 19.7 days to 10.1 days
• Zomato profits are also due to other income from their treasury.
• Swiggy’s with Instamart invented the quick commerce category. Zomato has taken early lead wafter acquiring Blinkit and Zepto continues to execute well. However, the market is still nascent, and enough avenues to grow.
• Swiggy’s has taken integrated app offering approach while Zomato has taken a multi-app approach which may help it it innovate faster.
• The company is one of the most valuable brand in the Consumer Technology & Services Platforms category and is among the Top 25 most valuable brands in India overall.
• I may apply only sall quantity in SwiggyIPOs on last day based on response to IPO, else skip it. Zomato has widening is s lead over swiggy in the years after its IPO. Zomato has turned profitable while Swiggy is in losses but could become profitable in years to come. Based on other parameters , Swiggy is fair valued or slightly under-valued compared to Zomato but it is only relative depending on whether one thinks, Zomato is correctly priced is is overvalued. Looks OK for long term.
• This post is exploratory and educational purposes only.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.