Swiggy IPO: All You Need to Know

As Swiggy, the food and grocery delivery platform, prepares to launch its much-anticipated initial public offering (IPO), its Updated Draft Red Herring Prospectus (UDRHP) reveals 10 critical highlights about the ₹10,000-crore IPO. 

About the Swiggy IPO

Swiggy IPO, one of the upcoming IPOs in the stock market, will include both newly issued shares and an offer for sale (OFS). The new shares are valued at ₹3,750 crore, and the OFS will feature up to 1.85 crore shares. Swiggy recently held an Extraordinary General Meeting (EGM) to consider raising this value to ₹5,000 crore (about $600 million).

About Swiggy

Swiggy IPO began as a food delivery service in 2014 and has since expanded to offer additional services, such as Quick Commerce (2020), Dineout (2022), and a pick-up/drop-off service called Genie (2020). It also runs other local commerce options like Swiggy Minis. 

According to SEBI guidelines, Swiggy IPO does not have a primary promoter. The company’s CEO and Founder, Sriharsha Majety, owns a 6.23% stake, and co-founder Lakshmi Nandan Reddy Obul holds 1.62%. As per the UDRHP filing, Swiggy has 5,232 equity shareholders and 1,187 holders of compulsory convertible Preference Shares (CCPS).

Selling Shareholders in Swiggy

The UDRHP lists 10 major corporate shareholders planning to sell shares: Accel India IV (Mauritius), Apoletto Asia, Alpha Wave Ventures, LP, Coatue PE Asia XI LLC, DST EuroAsia V B.V., Elevation Capital V, Inspired Elite Investments, MIH India Food Holdings, Norwest Venture Partners VIIA-Mauritius, and Tencent Cloud Europe B.V. Individual shareholders participating in the sale include Lakshmi Nandan Reddy Obul, P.R. Venketrama Raja, Rahul Jaimini, Samina Hamied, and Sriharsha Majety.

Lead Managers for the IPO

Kotak Mahindra Capital, Citigroup Global Markets India, Jefferies India, and Avendus Capital are the book-running lead managers (BRLM) for Swiggy’s IPO, with Link Intime India serving as the issue’s registrar.

Objectives of the Offer

Swiggy IPO has outlined 5 main goals for its IPO proceeds:

• Up to ₹137.41 crore will be invested in Scootsy, a Swiggy subsidiary, to repay or pre-pay borrowings.
• ₹982.40 crore will support Scootsy’s expansion of its Dark Store network for quick commerce, covering store leases and licenses.
• ₹586.20 crore will go towards technology and cloud infrastructure.
• ₹929.50 crore will fund brand marketing and promotional efforts to boost platform visibility.
• The funds will be deployed over 4 fiscal years, from FY2025 to FY2028. 

The company has reported net losses annually since inception, with negative cash flows from operations. For the fiscal year ending March 31, Swiggy’s losses were ₹2,350.24 crore, down from ₹4,179.30 crore in FY23 and ₹3,628.89 crore in FY22. Revenue for the same period was ₹11,247.39 crore, up from ₹8,264.59 crore in FY23 and ₹5,704.89 crore in FY22.

Swiggy vs. Zomato: Financial Ratios

In FY24, Swiggy’s revenue was ₹11,247.39 crore, compared to Zomato’s ₹12,114 crore. Swiggy’s EPS (earnings per share) was (₹10.70), while Zomato posted ₹0.41. Swiggy’s NAV (net asset value) per share is ₹35.48, versus ₹23.14 for Zomato.

Risks to Swiggy

• Swiggy’s ability to achieve revenue growth while managing expenses and cash flows is essential to reducing losses.
• Challenges in retaining or acquiring cost-effective user bases may affect financial stability.
• Attracting and keeping delivery partners is crucial to smooth operations.
• Keeping existing restaurant, merchant, and brand partners while bringing in new ones is essential.
• Higher operational costs passed to customers could reduce order volume.
• Effective management of Dark Stores is key to sustaining the quick commerce business.

Legal Proceedings

Swiggy, some of its subsidiaries, and directors are involved in legal proceedings at various levels. Adverse rulings could lead to financial obligations or provisions for potential payments.

Employee Attrition

Swiggy’s voluntary employee attrition rates were 34.56% in FY24, 33.14% in FY23, and 32.69% in FY22.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.