Though the IPO listing will take place on November 13, the grey market activity indicates a muted listing on the day.
The Swiggy IPO, which is the second largest public offer this year after Hyundai Motor India and sixth biggest ever in the country, has received 3.59 times subscription receving about on the back of increased buying by QIBs like mutual funds. The Rs 11,300-crore IPO received bids for 57.53 crore shares as against the 16.01 crore shares on offer.
The IPO allotment will take place on Monday, November 11.
Though the IPO listing will take place on November 13, the grey market activity indicates a muted listing on the day.
The Swiggy IPO was available for public subscription between November 6 and November 8.
Though the IPO received an overall 3.59 times subscription, its portion allocated for retail individual investors (RIIs) saw 1.14 times subscription, while non-institutional investors subscribed 41% of their quota. Qualified institutional buyers (QIBs) bid for 6.02 times their reserved portion.
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Swiggy IPO GMP Today
According to market observers, unlisted shares of Swiggy Ltd are continue to trade at just Rs 1 higher in the grey market than its issue price. The Rs 1 grey market premium or GMP means the grey market is expecting a muted listing or discount listing.
The GMP is based on market sentiments and keeps changing. ‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Recently, Afcons Infrastructure IPO was also listed at a 7 per cent discount.
Swiggy IPO: What Analysts Said
Analysts at brokerage firm Bajaj Broking in their IPO note recommended a ‘Subscribe for Long Term’ rating.
“Over the past three fiscal years, the company has consistently reported losses on a consolidated basis. In FY22, the total income was Rs 6,119.78 crore, with a net loss of Rs 3,628.90 crore. The following year, FY23, saw an increase in total income to Rs 8,714.45 crore, but the net loss also increased to Rs 4,179.31 crore. In FY24, the total income rose further to Rs 11,634.35 crore, while the net loss reduced to Rs 2,350.24 crore. In the first quarter of FY25, ending on June 30, 2024, the company recorded a total income of Rs 3,310.11 crore and a net loss of Rs 611.01 crore. These figures indicate that the company has been experiencing continuous financial losses over the reported periods,” Bajaj Broking said in the note.
For the last three fiscals, the company has reported an average EPS of minus Rs 14.90, and an average RoNW of minus 35.39 per cent. The issue is priced at a P/BV (price-to-book-value) of 11.60 based on its NAV of Rs 33.61 as of June 30, 2024, and is at a P/BV of 7.31 based on its post-IPO NAV of Rs. 53.36 per share (At upper cap).
“If we attribute annualized FY25 earnings to post-IPO fully diluted equity base, then the asking price is at a negative P/E, and based on FY24 earnings also it is at a negative P/E, as the company has posted losses for the reported periods. On other parameters the issue appears aggressively priced,” Bajaj Broking added.
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Swiggy IPO Vs Zomato Shares
“Zomato exhibits higher market traction with a robust gross order value CAGR of 23.0% as opposed to Swiggy’s 15.5%. Its average order value growth also surpasses Swiggy’s, underscoring its operational effectiveness. Although the upcoming Swiggy IPO offers a chance for expansion, it is unclear how well it will be able to use its resources to close the gap with Zomato. Swiggy’s capacity to increase the size of its baskets for speedy commerce and broaden its dark store footprint will be crucial to the success of its IPO, which might have a big impact on its market share and profitability,” said Akriti Mehrotra, research analyst at StoxBox, according to a livemint report.
Another analyst Anshul Jain, who is head of research at Lakshmisgree Investment and Securities, also said Zomato looks better in terms of profitability.
Advising investors to prefer Zomato shares over Swiggy IPO, Jain, according to livemint, said, “A major portion of Swiggy IPO comprises OFS, giving exit to early investors at high prices. Swiggy has been incurring losses and there is uncertainty around its profitability. On the other hand, Zomato is a relatively more stable and profitable company. You are getting Zomato shares, a profitable company, at the same valuation to loss-making Swiggy. Hence, it is advisable to avoid investing in Swiggy IPO and rather buy Zomato shares, which have higher revenue and profit clarity.”
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Swiggy IPO: More Details
The Swiggy IPO is a combination of a fresh issue of shares worth Rs 4,500 crore and an offer for sale (OFS) of Rs 6,800 crore, they added.
Those selling shares in the OFS route are — 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 VII-A Mauritius and Tencent Cloud Europe B.V.
Early investors like Accel, Elevation Capital and Norwest Ventures are making up to 35 times in returns on the portion they decided to sell. On the other hand, SoftBank continues to stay invested.
Big investors including Norway’s sovereign wealth fund Norges and Fidelity have placed bids worth more than $15 billion in the Swiggy IPO, 25 times the $605 million portion reserved for such investors, according to Reuters.
Going by the IPO papers, proceeds from the fresh issue to the tune of Rs 137.41 crore will be used for debt payment of subsidiary Scootsy.
Additionally, Rs 982.40 crore will be invested in Scootsy for expanding the Dark Store network in the quick commerce segment, with Rs 559.10 crore allocated for setting up dark stores and Rs 423.30 crore for lease or licence payments.
The company will also invest Rs 586.20 crore in technology and cloud infrastructure, Rs 929.50 crore for brand marketing and business promotion, and funds will be allocated for inorganic growth and general corporate purposes.
Founded in 2014, Swiggy had a valuation of nearly USD 13 billion in April. The company’s annual revenue stood at USD 1.09 billion as on March 31, 2023, and has more than 4,700 employees, according to Tracxn, a global startup data platform.
Swiggy’s confidential offer document was approved by Sebi in September and following this updated draft papers were filed.
