Swiggy Limited IPO: Check IPO Date, Lot Size, Price & Details

About the company:

Swiggy Limited, established in 2014, offers a convenient platform through a single app that allows users to browse, choose, order, and pay for food (Food Delivery) and essential goods like groceries (Instamart), with items delivered by a network of on-demand delivery partners. Swiggy operates through five main business divisions namely a) Food Delivery; b) Out-of-home consumption for restaurant visits and events; c) Quick Commerce for on-demand grocery and household item delivery; d) Supply Chain and Distribution providing B2B logistics, warehousing, and distribution for wholesalers and retailers; e) Platform Innovation focused on new offerings like Swiggy Genie and Swiggy Minis. The platform also enables users to make restaurant reservations (Dineout), book events (SteppinOut), handle product pickups/deliveries (Genie), and engage in hyperlocal commerce (Swiggy Minis, among others). Swiggy also offers a membership program, “Swiggy One,” which provides members exclusive discounts and benefits. The platform also includes payment solutions like “Swiggy Money,” a digital wallet, “Swiggy UPI,” and a Swiggy-HDFC Bank credit card for added value. For business partners—including restaurants, grocery merchants, and brand partners—Swiggy offers a suite of support services that include analytics-based tools to enhance their online reach, as well as fulfillment and last-mile delivery solutions to improve supply chain efficiency. As of June 30, 2024, Swiggy’s grocery and household offerings comprised around 19,000 SKUs, covering everyday essentials, impulse snacks, recurring items like personal care products, occasional needs like pharmaceuticals, and festive items. By mid-2024, Swiggy’s Instamart service managed a network of 557 dark stores across 32 Indian cities, which expanded to 605 stores across 43 cities by September 10, 2024.

IPO Details:

The objectives of the fresh issue:

The company intends to utilize the net proceeds from the fresh issue towards funding the following objects:

• Investment in the Material Subsidiary, Scootsy, for repayment or pre-payment, in full or in part, of certain or all of its borrowings;
• Investment in the Material Subsidiary, Scootsy to support the Quick Commerce segment by expanding the Dark Store network through the establishment of new Dark Stores; and for covering lease and license payments;
• Investment in technology and cloud infrastructure;
• Brand marketing and business promotion expenses for enhancing the brand awareness and visibility of its platform, across segments; and
• Funding inorganic growth through unidentified acquisitions and general corporate purposes.

Key Strengths and Opportunities:

• Swiggy is focused on enhancing user engagement by increasing platform usage frequency and addressing growing convenience demands. Swiggy plans to introduce a variety of offerings tailored to different segments, from cost-effective options like PocketHero to premium selections on Swiggy Gourmet, thus appealing to a wide user base. Leveraging a data-driven technology infrastructure, Swiggy intends to rapidly test and scale new capabilities, continuously improving speed, selection, and value for customers. Their goal is to expand the platform’s range by adding diverse restaurant and merchant partners, including unique local brands through offerings like Swiggy Minis.
• Swiggy aims to capitalize on the anticipated growth in India’s online food delivery and quick commerce sectors, projected to expand significantly by 2028 according to Redseer’s report. India’s online food delivery and quick commerce markets are projected to grow at compound annual growth rates (CAGRs) of 17-22% and 60-80%, respectively, from 2023 to 2028. The report also forecasts a substantial increase in quick commerce’s share of the overall retail market in India, rising more than sixfold to approximately 2-3% by 2028. Additionally, quick commerce as a portion of online retail is expected to grow from 4.8% in 2023 to between 17-30% by 2028, indicating significant potential for further expansion.
• Swiggy distinguishes itself as the only platform in India that, as of June 30, 2024, seamlessly addresses the diverse needs of urban users for ordering in, dining out, and cooking at home within a single app. It achieved the highest share of consumer spending in hyperlocal commerce, measured by Monthly Gross Order Value (GOV) per Monthly Transacting User (MTU) for the quarter ending June 2024. Swiggy’s strong brand recognition, unified app approach, and high-frequency offerings promote greater user engagement, retention, and enable cost-effective expansion into new services. This strategy supports cross-selling, lowers user acquisition costs, and allows partners to reach customers through various offerings across the platform.

Risks:

• Swiggy has faced consistent net losses since its establishment in 2014, primarily due to high operational costs. While the company’s revenue has grown with the expansion of services like Quick Commerce, Genie, and Swiggy Minis, significant investments have been required to attract users, promote brand visibility, and enhance service offerings. These expenses include advertising, delivery facilitation, and employee benefits, among others. As a result, Swiggy has experienced negative cash flows each year, with cash outflows exceeding its operating income. The company’s future profitability depends on its ability to manage expenses effectively and generate sufficient revenue growth. If Swiggy cannot achieve this balance, it may continue to face substantial losses in the coming years.
• Swiggy’s growth relies heavily on its ability to expand offerings while retaining and attracting users in a cost-effective way. However, the company faces intense competition from Zomato, which enjoys a broad customer base and strong brand loyalty, particularly in the food delivery sector. This competitive landscape puts pressure on Swiggy’s market share, challenging its ability to maintain and grow its customer base. If Swiggy is unable to retain existing customers or attract new users affordably, it risks negative impacts on its business performance, financial stability, and operational results. Effectively managing these challenges is critical for Swiggy’s sustained growth in the highly competitive food delivery industry.
• Swiggy’s business relies heavily on attracting and retaining a robust network of delivery partners, and doing so efficiently is essential for its financial health and operational success. The company believes that a large, flexible pool of delivery partners, supported by user-friendly technology, is key to delivering a seamless service. However, since these partners work on a gig basis, they have the flexibility to choose their hours and days of work, often opting to work for multiple platforms or for limited hours. This can lead to fluctuations in delivery availability, which may impact service reliability and increase operational costs if not managed effectively.

Financial Snapshot:

Conclusion:

As of the fiscal year 2024, Swiggy Limited continues to operate at a loss, in contrast to its competitor, Zomato Limited, which has recently achieved profitability. Given Swiggy’s current financial position, competitive pressures, associated risks, and valuation, its IPO appears overvalued. Therefore, we advise investors to AVOID this IPO until the company’s financial performance and growth outlook improve. Waiting until Swiggy demonstrates improved financial results and a clearer path to sustainable growth would be a more prudent investment approach.