Swiggy To Use IPO Proceeds for Increasing Instamart Store Count

Food delivery giant Swiggy is set to allocate a significant portion of its upcoming initial public offering (IPO) funds to bolster its quick commerce venture, Instamart. This strategic move comes as competitors like BlinkIt, Zepto, and BigBasket intensify their efforts in the fast-growing sector.

While several existing investors, including Prosus Ventures, Norwest Venture Partners, and Goldman Sachs, may partially divest their Swiggy shares during the IPO, SoftBank is expected to maintain its stake. The IPO, anticipated to launch in November, is one of the most highly anticipated offerings of the year.

Swiggy plans to raise primary capital at a valuation of approximately $15 billion, with the final valuation to be determined during the road shows. The majority of the fresh funds will be used to expand Instamart’s network of dark stores, aiming to double the number to over 1,000 within the next four years. These dark stores will also be larger to accommodate a wider range of products.

Swiggy IPO coincides with Zomato’s rapid integration of BlinkIt, its own quick commerce acquisition. Zomato recently announced achieving adjusted EBITDA profitability in its quick commerce business.

Swiggy, which started as a restaurant aggregator in 2014, has focused on improving margins and reducing costs over the past 18 months. The company’s food delivery unit became profitable in March 2023.

However, quick commerce has proven to be a relatively new and challenging endeavour for Swiggy. Instamart, launched in 2020, has faced leadership changes and operational challenges. To address these issues, Swiggy has appointed Amitesh Jha as the new head of Instamart, bringing valuable experience from Flipkart.

Financial Performance

Swiggy’s financial performance in FY24 was encouraging. Losses were reduced by 43% to ₹2,350 crore, and revenue from operations increased by 36% to ₹11,247 crore. The company’s consumer-facing businesses, including food delivery, Instamart, and dining, recorded a total gross order value (GOV) of ₹35,000 crore.

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