Swiggy, the food delivery giant, faced a significant decline in its share price as it plummeted over 5% in early trade on Wednesday. The fall comes as the one-month anchor lock-in period ended, paving the way for a substantial volume of shares to hit the market. With Swiggy shares erasing the gains of the previous session, investors and analysts are keenly observing the market's reaction. But what triggered this drop, and what does it mean for Swiggy’s long-term trajectory? Let’s dive deeper.
Swiggy Share Price Falls Over 5%
The Swiggy share price declined sharply by 5.07%, trading at ₹515.95 per share on the BSE. This dramatic fall followed the expiration of the one-month anchor lock-in period, allowing anchor investors to sell up to 50% of their holdings.
The lock-in expiration enabled approximately 6.5 crore shares, constituting a 3% stake in the company, to be eligible for trading. This surge in availability led to immediate market pressure, resulting in the share price dip.
What Does an Anchor Lock-In Period Mean?
An anchor lock-in period restricts anchor investors from selling their shares for a predefined duration post-IPO. For Swiggy, the initial one-month period has now ended, with another 50% set to unlock by February 9.
The Role of Anchor Investors in Swiggy’s Journey
Who Are Anchor Investors?
Anchor investors are institutions or high-net-worth individuals who subscribe to shares before an IPO opens to the public. Their participation often boosts confidence in the stock.
Impact of Lock-In Expiry
While the expiry of the lock-in doesn’t necessarily mean all shares will flood the market, the potential for large sell-offs can create volatility, as seen in Swiggy’s case.
Swiggy Share Price Trend
A Promising Market Debut
Swiggy made its stock market debut on November 13, listing at ₹420 per share—a 7.69% premium over its issue price of ₹390.
Post-Listing Performance
Despite today’s fall, Swiggy’s shares have shown resilience, trading over 30% higher than their IPO price. In fact, before this drop, the stock rallied impressively, driven by strong market sentiment and optimistic projections from global brokerage firms.
Why Did the Swiggy Share Price Rally Previously?
Brokerage Insights
Global brokerage firm CLSA initiated coverage of Swiggy with an "outperform" rating and set a target price of ₹708 per share. CLSA’s confidence stems from Swiggy’s projected growth in food delivery and quick commerce.
Market Potential
Swiggy’s total addressable market (TAM) is projected at $16 billion for food delivery and $27 billion for quick commerce by FY27. Such numbers have kept long-term investors optimistic despite short-term dips.
What Analysts Are Saying About Swiggy's Fall?
Short-Term Pressure
Analysts attribute the fall to temporary supply-demand imbalances as more shares become tradable.
Long-Term Growth Potential
Despite the dip, Swiggy’s growth story remains intact. Analysts like CLSA foresee a compound annual growth rate (CAGR) of 43% in gross order value (GOV) and 32% in revenue from FY24 to FY27.
How Does This Impact Retail Investors?
Retail investors might feel apprehensive, but experts suggest focusing on the long-term potential. The current dip presents an entry point for those confident in Swiggy’s market expansion.
FAQs
1. Why did Swiggy’s share price fall over 5%?
The decline was due to the end of the one-month anchor lock-in period, allowing 6.5 crore shares to become eligible for trading.
2. What is an anchor lock-in period?
It’s a restriction period during which anchor investors cannot sell their shares.
3. How did Swiggy’s IPO perform?
Swiggy’s IPO listed at ₹420 per share, a 7.69% premium to its issue price of ₹390.
4. What is Swiggy’s future growth potential?
Analysts project a CAGR of 43% in gross order value and 32% in revenue for FY24-27.
5. Should I invest in Swiggy shares now?
While short-term volatility exists, long-term projections remain strong, making it a potential buy for risk-tolerant investors.
6. When will the next lock-in period expire?
The next lock-in period ends on February 9, unlocking another 50% of anchor investors’ shares.
Conclusion
Swiggy’s 5% drop in share price post-lock-in expiry is a classic example of market dynamics influenced by anchor investor actions. While the immediate impact has raised eyebrows, the company’s robust growth trajectory and favorable projections keep it firmly on investors’ radars. Whether you’re a cautious observer or an eager investor, Swiggy’s evolving market story is one to watch closely.
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