Swiggy IPO: An Opportunity to Consider?
Swiggy is stepping into the public market with its highly anticipated IPO, opening for subscription from November 5-7, 2024. With the goal of raising ₹10,400 crore, the IPO will be divided into two parts: a fresh issue of ₹3,750 crore and the remainder through an offer for sale from existing shareholders.
Key Financial Highlights:
- Valuation: Swiggy is aiming for a valuation between $12.5 billion to $13.5 billion, positioning it as a major player in the food delivery and quick commerce space in India.
- Revenue Growth: For FY24, Swiggy reported ₹11,247 crore in revenue, a 36% jump from the previous year, reflecting the company’s strong market expansion and strategic moves.
- Loss Reduction: A significant improvement was made in cutting down losses by 44%, reducing them to ₹2,350 crore in FY24 compared to ₹4,179 crore in FY23.
- Q1 FY25 Performance: Despite a 35% YoY increase in revenue for Q1 FY25 (₹3,222 crore), Swiggy’s losses rose slightly to ₹611 crore, attributed to higher operational expenses.
Business Segments:
Swiggy’s growth is driven by multiple business units:
- Food Delivery: The company’s core business remains a key driver, serving millions of customers daily.
- Quick Commerce (Instamart): Swiggy is rapidly expanding its quick commerce services, delivering groceries and essentials within minutes, an area that has huge growth potential.
- Hyperlocal Services: Swiggy Genie, its logistics and delivery service, adds another layer of value to the company’s portfolio.
Comparison with Competitors:
Swiggy operates in a highly competitive market, facing off against rivals like Zomato, which had a market capitalization of ₹2.5 lakh crore in 2024. However, Swiggy’s price-to-sales ratio of 7x is more conservative compared to Zomato’s 20x, potentially making Swiggy’s IPO more attractive for investors seeking a more reasonable entry point.
Investment Considerations for Riddhi Siddhi Share Brokers:
For clients evaluating Swiggy’s IPO, here are a few key takeaways:
- Revenue Growth & Market Potential: Swiggy’s strong revenue growth highlights its ability to capture market share, especially in the quick commerce sector.
- Improved Financials: A significant reduction in losses demonstrates Swiggy’s path toward profitability, although rising operational costs remain a challenge.
- Valuation: Swiggy’s valuation, while substantial, is backed by its multiple revenue streams and continued growth in quick commerce and food delivery. It may present an attractive long-term investment opportunity, especially given the relatively lower price-to-sales ratio compared to competitors.
- IPO Size & Listing: With a total issue size of ₹10,400 crore, the IPO is expected to attract a broad range of investors when it lists on the BSE and NSE on November 12, 2024.
Final Thought:
At Riddhi Siddhi Share Brokers, we suggest considering Swiggy’s IPO based on its strategic growth, improved financials, and market position. However, given the competitive landscape and ongoing operational costs, it’s essential to weigh both the risks and rewards before making a decision.
“We suggest… you invest.”
Disclaimer: The information provided in this post, including financial data and projections related to the Swiggy IPO, is for informational purposes only and does not constitute financial advice. The stock market is inherently volatile, and past performance is not indicative of future results. Investors should conduct their own research, consult with financial advisors, and consider their individual risk tolerance before making any investment decisions. Riddhi Siddhi Share Brokers is not responsible for any losses incurred as a result of reliance on this information.