Swiggy Plans an IPO Move

Swiggy’s expansion into new business areas, such as delivering food and essential items, offers a proactive approach to meeting customer needs. Swiggy has obtained the green light from shareholders for an Initial Public Offering (IPO). The company aims to raise Rs 3,750 crore ($450 million) in new funds through IPO. Before submitting an IPO document, Swiggy aims to raise around Rs750 crore from anchor investors in a pre-IPO round. Since its start, Swiggy has come a long way from being a private limited entity to a public limited company. Swiggy is gearing up for an initial public offering in the later years. Swiggy has reduced the workforce by 6%, impacting 350-400 positions across various departments, which include technology, call centers, and corporate functions.

Swiggy, backed by Softbank, advised seven investment banks on IPO plans. Kotak Mahindra Capital, Citi, JP Morgan, BofA Securities, Jefferies, ICICI Securities, and Avendus Capital are the chosen banks. Apart from Swiggy’s apparent inability to attain profitability in FY24, Swiggy is moving towards IPO plans. The profitability showcases how it is the most crucial factor for success in the public market. Swiggy’s quick commerce business is a challenge in terms of competition. Swiggy’s prospect for IPO includes fresh issues of shares valued at INR 3,750.1 crore (approximately $449 million) and an offer-for-sale component at INR 6 664 crore (around $ 799 million).

Swiggy’s investors eagerly await the financials, particularly regarding profitability and future growth strategies. However, the delay in public access to critical information because of confidential filings has left uncertainty. In a major comparison with Zomato, Swiggy’s main rival, which recently went public, investors might seek to assess and contrast both companies’ financial performance and future outlook before making informed investment choices. Swiggy was valued at $10.7 billion, although several investors, including investors in Invesco and Baron Capital, increased the value of investments in Swiggy. The upward adjustment suggests that Swiggy’s valuation can exceed $12 billion.

How Profitability is a Big Question Mark?

Swiggy will likely announce revenue exceeding INR10,000 crore in FY24, showcasing a 20% increase from INR 8,260 crore reported in FY23. According to internal sources, the growth is primarily attributed to a substantial rise in Instamart orders, platform fees from food delivery, and increased popularity of the dining-out business.

Swiggy’s disclosure of H1 FY24 shows that the company generated INR 4 735 crores in revenue solely from food delivery and its quick commerce arm, Instamart. The figure accounts for over half of the combined revenue from two verticals in FY23.

Swiggy started its journey as a food delivery startup, and while it was an early player in the quick commerce sector with Swiggy Instagram, its two main competitors, Blinkit and Zepto, have capitalized more on quick commerce trends. Within food delivery, Swiggy has progressively increased its platform fees and introduced collection fees from restaurants over the past year. Swiggy imposes charges ranging from INR3 to 4 per order on customers, directly strengthening Swiggy’s profitability.

Swiggy’s confidential IPO filing has generated curiosity, prompting many questions among investors and observers. The method offers strategic benefits such as keeping confidential details until necessary, and potential investors are likely to await the release of more comprehensive financial details before making well-informed decisions. Swiggy is likely to announce an IPO in the latter part of 2024. In the first three quarters of fiscal year FY24, Swiggy generated INR 5,476 crore in operational revenue but incurred a loss of INR 1,600 crore. As of April 2024, Swiggy’s unlisted stock is valued at INR350 for each share. You can easily gain in-depth knowledge of Swiggy unlisted share price in a few clicks. Investors could navigate smoothly to the dedicated section of unlisted shares. Here, they could find comprehensive listings of various companies like Swiggy. Stockify fulfills every need of pre ipo shares investors, making stock trading accessible and convenient for all. 

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