Foodtech

Swiggy Slashes IPO Valuation Target by 10-16% Amid Market Volatility, Eyes $12.5-$13.5 Billion

• ByStartupStory     |    October 25, 2024

Swiggy, India’s food delivery leader, has adjusted its valuation expectations to $12.5 billion-$13.5 billion for its upcoming initial public offering (IPO), trimming its previous target by 10-16% due to market volatility. As reported by Reuters, the IPO—originally set at a $15 billion valuation—is expected to raise $1.4 billion in November, positioning it as India’s second-largest stock offering, following Hyundai Motor India’s recent market entry.

Recent fluctuations in Indian stock markets have influenced Swiggy’s valuation strategy. Reuters noted that the company aims to “ensure a lot of value is left on the table” for investors subscribing to the issue. Market conditions have presented challenges, with India’s Nifty 50 benchmark index facing a four-week streak of losses, retreating by 7.15% from its peak on September 27 amid substantial foreign investor sell-offs.

Hyundai Motor India’s IPO debut, which saw shares drop by 7.2% on the opening day, underscores a cautious investor sentiment towards high valuations. However, despite recent volatility, India’s IPO market remains robust, with 270 companies raising an impressive $12.57 billion in 2024, surpassing last year’s $7.4 billion.

Swiggy, backed by prominent investors such as SoftBank and Prosus, has outlined plans to list on November 13, with subscription opening the prior week, subject to market conditions. Pre-IPO roadshows are scheduled to commence on October 30 in several major Indian cities. The IPO will feature new equity shares valued at ₹3,750 crore, alongside an offer-for-sale (OFS) from existing shareholders comprising 18.52 crore shares, as per the company’s updated draft red herring prospectus (UDRHP-I).

The IPO includes segments for qualified institutional buyers (QIBs), anchor investors, and mutual funds, with allocations for non-institutional and retail buyers. Investors with applications between ₹2 lakh and ₹10 lakh will have dedicated slots, with a separate allocation for bids exceeding ₹10 lakh.

According to the UDRHP-I, Swiggy’s IPO book-running lead managers (BRLMs) include Kotak Mahindra Capital Company, Citigroup Global Markets India Private Ltd, Jefferies India Private Ltd, and Avendus Capital Private Ltd. Link Intime India Private Ltd will serve as the IPO’s registrar.

Swiggy’s confidential IPO document was approved by the Securities and Exchange Board of India (SEBI) in September. The business initially submitted its filing on April 30 under SEBI’s confidential pre-filing process, updating it subsequently in light of market trends.

Swiggy has reported operational losses since its inception, though its net losses have steadily declined. As of March 31, 2024, the company reported annual losses of ₹2,350.24 crore, improving from ₹4,179.30 crore in FY23 and ₹3,628.89 crore in FY22. Swiggy’s operating revenue grew to ₹11,247.39 crore, up from ₹8,264.59 crore and ₹5,704.89 crore in the previous two years.

In India’s competitive online food delivery sector, Swiggy’s rival Zomato boasts a price-to-earnings (P/E) ratio of 742.50. Both companies have expanded into the rapidly growing quick commerce space, delivering groceries and essential items within minutes. Swiggy has amassed approximately $3.62 billion in funding over 15 rounds from more than 50 institutional and angel investors. In a funding round led by Invesco in 2022, Swiggy doubled its valuation to $10 billion.

Follow Startup Story