Swiggy Shares Trade at ₹330-₹360 Ahead of IPO: A Closer Look at the Valuation
Swiggy, the popular food delivery platform, is currently attracting significant attention in the stock market as it gears up for its much-anticipated initial public offering (IPO). As of today, September 25, 2024, the share price for Swiggy’s unlisted shares is trading between ₹330 to ₹360 per share in secondary transactions. This valuation places the company at approximately $9.3 billion, a notable decrease from its previous valuation of $10.7 billion during its last funding round in 2022.
Main Points
Recent reports indicate that various investors and financial institutions are actively engaging in buying and selling Swiggy shares. Notable sellers include prominent venture capital firms like Prosus, Accel, and Elevation Capital, which are offloading portions of their stakes ahead of the IPO. These transactions are primarily being facilitated by wealth management firms and high-net-worth individuals (HNIs) who see potential in Swiggy’s growth trajectory.
Secondary Transactions
In secondary market transactions, shares are changing hands without Swiggy receiving any direct capital infusion. The current trading range reflects a typical discount of about 20% compared to the company’s last primary funding valuation. Investors are optimistic about Swiggy’s future, particularly as it prepares for a public listing expected to value the company between $10 billion to $13 billion.
Swiggy has been on a growth path, with its revenue showing robust increases. The company reported a 42% growth in sales for FY23, driven by a resurgence in demand post-COVID-19 lockdowns. As of the first nine months of FY24, Swiggy’s revenue from operations reached ₹5,476 crore, with food delivery contributing significantly to its gross order value (GOV) of ₹24,230 crore.
Despite these positive trends, Swiggy has faced challenges with increasing operational losses. For FY24, the company reported an EBITDA loss of approximately ₹88 crore in food delivery services, although this marked an improvement compared to previous years. The overall losses have accumulated to around ₹27,000 crore, reflecting the costs associated with scaling its instant grocery delivery service, Instamart.
IPO Plans
Swiggy initiated its IPO process back in March 2022 and has since made significant strides towards listing. The company has engaged investment banks such as ICICI Securities and JP Morgan to manage its IPO efforts. It aims to raise around ₹3,750 crore ($450 million) in fresh capital through this offering, alongside an additional offer-for-sale component valued at up to ₹6,664 crore ($800 million).
The upcoming IPO is expected to attract considerable investor interest due to Swiggy’s established market presence and innovative business model. The company operates across more than 500 cities in India and has diversified its offerings beyond food delivery into areas like grocery delivery and package pickups.
When comparing Swiggy’s valuation with its main competitor Zomato, which has a market capitalization around ₹2.43 lakh crore ($29 billion) as of now, Swiggy’s expected IPO valuation will position it competitively within the Indian food tech sector. If Swiggy successfully lists at a valuation near $13 billion, it will closely match Zomato’s market cap at the time of its IPO debut.
Investor sentiment remains cautiously optimistic as market analysts predict that Swiggy’s strong brand recognition and customer loyalty will drive future growth. The company’s strategic focus on enhancing operational efficiency and expanding service offerings is expected to bolster its financial performance leading up to the IPO.
Disclaimer: The information given in this article is from investment experts and brokerage companies, they do not represent Local Haryana. Before taking any investment related decision, you must consult a certified expert.
