Swiggy IPO opens for subscription today. GMP at 3%. Should you invest?

Swiggy Ltd’s Initial Public Offer (IPO) will open for subscription today. The issue will be available to investors for bidding till November 8.

Swiggy brought the IPO at a low valuation of $11.3 billion against its previous target of $15 billion. The company issued about Rs. 11300 crore is planned to be raised.

The issue consists of 17,50,87,963 equity shares with an Offer for Sale (OFS) of Rs. 4,499 crore includes new equity sale.

Swiggy IPO Price Band

The company paid Rs. A price band of 371-390 has been set, where investors can bid for 38 shares in one lot and thereafter in multiples.

Swiggy IPO GMP

Before the launch of the issue, the shares of the company in the unlisted market were trading at Rs. were trading with a GMP of 12. This implies a marginal premium of 3% over the issue price.

Swiggy IPO Review

Analysts were mixed on the IPO given the company’s current financial position, competitive pressures and valuation. However, investors may subscribe to the issue based on long-term potential given the scope for growth in the food delivery space.

“As of FY2024, Swiggy continues to operate at a loss unlike its rival, Zomato, which has recently achieved profitability. We advise investors to avoid this IPO until the company’s financial performance and growth outlook improve. Swiggy there Wait till shows improved financial results and a clear path to sustainable growth will be a more prudent investment approach,” Semco Securities said.

“Swiggy, at the upper price band of Rs 390.0, has Price/Sales, EV/Sales and P/BV multiples of 7.8x/7.3x/7.1x respectively when compared to Zomato. SBI Securities said, all these The issue seems to be priced right on the parameters.

Other details

The food delivery company proposes to use the IPO proceeds for investment in its materials subsidiary Scooty, investment in technology and cloud infrastructure, and brand marketing and business promotion. This will be done over a period of four to five years.

Swiggy competes with Zomato in India’s online restaurant and food delivery sector, and both have made major bets on the boom in “quick-commerce”, where groceries and other products are delivered within 10 minutes.

The company has made net losses every year since incorporation and has negative cash flow from operations.

For the financial year ended March 2024, the deficit was Rs 2,350 crore as against Rs 4,179 crore in FY23 and Rs 3,628 crore in FY22. Income from operations in this period, however, in FY22 was Rs. 5,704 crore in FY24, doubling to Rs. 11,247 crores.

Kotak Mahindra Capital, Citigroup Global Markets, Jefferies India and Avandus Capital are the book running lead managers, while the registrar of the issue is Link Intime India.

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