Swiggy Prepares for $800 Million IPO Early Next year

2 March 2022
3 mins read
by Angel One
Swiggy Prepares for $800 Million IPO Early Next year

Swiggy, India’s leading food delivery company, has been eyeing to raise a minimum of $800 million from an IPO next year. It aims to expand its market share with such funds amidst neck-to-neck competition from Zomato in the food business. Keep scrolling to know more!

What Is Swiggy’s Valuation?

Since 2014, the company has raised around $3.3 billion from marquee investors such as Accel Partners, Invesco, Prosus Ventures and SoftBank. Earlier this year, Swiggy was valued at nearly $10.7 billion ─ after raising $700 million. This figure is almost twice the valuation of $5.5 billion in July 2021, for which the firm raised $1.25 billion.

Zomato, its publicly listed rival, comprises a market capitalization of around Rs. 676 billion ($9 billion).

What About the Market Backdrop?

Swiggy is gearing up for its public listing ─ starting with the inclusion of independent directors to its board. Meanwhile, India’s stock index (benchmark) is moving down after a sharp rise in 2021 due to geopolitical tensions, a slow recovery of the global economy and the U.S. Federal Reserve’s potential rate surges.

Since October, the index has dropped by 6.5%, while foreign investors have become Indian stocks’ net sellers. The shares of startups such as Nykaa, Policybazaar, Zomato and Paytm that were listed in 2021 have since collapsed.

Policybazaar’s shares have dropped 36% from the list price, while Nykaa’s shares have fallen 33%. Paytm’s shares have slumped at below half the list price (that was Rs. 1,950 apiece). In this scenario, it’ll be hard for Swiggy to entice investors with its equity story.

Get an Insight into Swiggy’s Business!

In December 2021, the monthly sales of the firm stood at $250 million through its food delivery segment. However, during the October-December quarter, Zomato reported sales worth $733 million.

Swiggy engages in brand extension with daily essentials within 30 minutes, delivery of groceries and quick commerce. Instamart is the prompt delivery service introduced in August 2020. It will utilise most of the funds raised in January ($700 million). By September, Instamart may expect gross sales of $100 million each month. Besides, Swiggy also operates a pick-and-drop business.

Zomato is willing to enter into the quick commerce segment through Blinkit ─ which is yet to be included in its app. Its losses prior to exceptional items and taxes amounted to $52 million (Rs. 3.83 billion) in the October-December tenure. On the other hand, Swiggy reported Rs. 13.14 billion losses in the fiscal year ended in March 2021.

Wrapping Up

Through its IPO ambitions, Swiggy wants to flourish in the logistics sector along with the food delivery business. The addition of instant commerce under one umbrella will build up its value proposition. However, it needs to work on its profitability to expand market share and attract public markets.

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Frequently Asked Questions

1. Who are the competitors of Swiggy’s quick commerce business?

Swiggy’s quick commerce segment faces challenges from Y Combinator’s Zepto, Zomato’s Blinkit, Tata Group’s BigBasket, and Reliance Industries’ Dunzo.

2. Who are the other rivals of Swiggy apart from Zomato?

Food delivery entities such as Spoonjoy, Yumist, Dazo and TinyOwl are some of Swiggy’s competitors. These companies have raised their first investments from Nexus Venture Partners, Sequoia Capital, Saif Partners and Accel Partners. This industry has been one of the largest beneficiaries of the 2014-15 funding boom.

3. Who are the founders of Swiggy?

Rahul Jaimini, Nandan Reddy and Sriharsha Majety are the founders of Swiggy.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.