Swiggy IPO: A Promising Investment Opportunity on the Horizon

Since its founding in 2014, Swiggy Limited has become a leading force in India’s booming on-demand delivery market. Known for its easy-to-use app, Swiggy connects millions to a wide range of services, from food delivery to groceries and logistics, making it a go-to solution for urban residents looking for convenience and innovation.

Upcoming IPO: A Chance to Invest

Swiggy is set to launch an Initial Public Offering (IPO) from November 6 to November 8, 2024, presenting a remarkable investment opportunity for those looking to engage with the evolving delivery market. The IPO aims to raise a total of ₹11,327.43 crores, comprising a fresh issue worth ₹4,499 crores and an offer for sale of ₹6,828.43 crores.

Let’s explore the Swiggy IPO in detail and how HDFC Sky’s innovative ‘One-Click IPO’ tool simplifies the investment process for eager investors.

Swiggy: An Overview

Swiggy operates as a technology-driven consumer platform, offering an all-in-one app that enables users to order food, groceries, and household essentials, as well as reserve tables at restaurants, book events, and use pick-up/drop-off services. Its diverse offerings include:

• Food Delivery
• Instamart
• Dineout
• SteppinOut
• Genie

Since launching its food delivery service in 2014, Swiggy has emerged as a leader in hyperlocal commerce, introducing Quick Commerce in 2020. Its membership initiative, Swiggy One, delivers discounts to users, while in-app payment options like Swiggy Money, Swiggy UPI, and an HDFC co-branded credit card facilitate seamless transactions.

Moreover, Swiggy empowers its partners with various business tools, including analytics and fulfillment solutions, to enhance last-mile delivery efficiency. The company’s robust technology framework allows for the rapid integration of new services, optimising user experience. Recognised in Kantar’s 2024 BrandZ report as India’s leading Consumer Technology & Services brand, Swiggy continues to expand its reach and enhance user engagement.

Financial Snapshot

Financial Performance Metrics

Analysis of Financial Trends

• Total Assets: The company’s total assets have seen a decrease from ₹14,405.74 crore in FY 2022 to ₹10,341.24 crore by June 2024, suggesting potential restructuring or optimisation efforts.
• Revenue Growth: Revenue has shown substantial growth, increasing from ₹6,119.78 crore in FY 2022 to ₹11,634.35 crore in FY 2024—a 34% year-over-year rise, with ₹3,310.11 crore reported in June 2024.
• Profitability: Although Swiggy continues to incur losses, there has been notable improvement, with losses decreasing from ₹-4,179.31 crore in FY 2023 to ₹-2,350.24 crore in FY 2024 and further down to ₹-611.01 crore by June 2024.
• Net Worth: The decline in net worth from ₹12,266.91 crore in FY 2022 to ₹7,444.99 crore by June 2024 indicates ongoing equity strain due to persistent losses.
• Reserves and Borrowing: Reserves have also dropped significantly, reflecting accumulated losses. Total borrowing has seen a slight increase, suggesting minimal reliance on debt compared to overall assets.

IPO Details and Schedule

• IPO Opening Date: November 6, 2024
• IPO Closing Date: November 8, 2024
• Listing Date: November 13, 2024
• Face Value: ₹1 per share
• Price Band: ₹371 to ₹390 per share
• Lot Size: 38 shares
• Total Issue Size: 290,446,837 shares (₹11,327.43 Cr)
• Fresh Issue: 115,358,974 shares (₹4,499.00 Cr)
• Offer for Sale: 175,087,863 shares (₹6,828.43 Cr)
• Employee Discount: ₹25 per share
• Issue Type: Book Built Issue IPO
• Listing At: BSE, NSE

As Swiggy prepares for its IPO, investors should open free demat account to hold their shares electronically.

Tentative IPO Timeline

• Basis of Allotment: November 11, 2024
• Initiation of Refunds: November 12, 2024
• Credit of Shares to Demat Accounts: November 12, 2024

IPO Reservation Breakdown

• Qualified Institutional Buyers (QIB): Not less than 75% of the net issue
• Retail Investors: Not more than 10% of the net issue
• Non-Institutional Investors (NII): Not more than 15% of the net issue

Objectives Behind the IPO

The proceeds from the IPO are earmarked for several strategic initiatives, including:

• Repaying borrowings related to Scootsy
• Expanding the Dark Store network for Quick Commerce, covering lease and license costs
• Enhancing technology and cloud infrastructure
• Funding brand marketing and promotional efforts to boost platform visibility
• Supporting inorganic growth through potential acquisitions and other general corporate purposes

Utilising margin trading can enhance an investor’s ability to capitalise on the Swiggy IPO, enabling them to buy more shares than they could with their available cash alone.

Strengths of Swiggy’s IPO

• Market Leader: Swiggy is a pioneer in hyperlocal commerce in India, continuously innovating for enhanced user experience.
• User Base: In its tenth year, Swiggy has reached 112.73 million users through its unified platform and extensive partner network.
• Increased Engagement: The average user now engages in 4.50 transactions monthly, reflecting strong customer loyalty.
• Brand Recognition: Recognised as the top brand in Consumer Technology & Services, Swiggy leverages its reputation for better user engagement and rapid scaling.
• Partnership Opportunities: Swiggy’s platform provides numerous opportunities for restaurant and merchant partners, fostering cost-effective engagement.
• Experienced Leadership: The management team combines 52 years of expertise, emphasising innovation, transparency, and accountability.

Potential Risks

• Ongoing Losses: Despite revenue growth, Swiggy faces persistent net losses and negative cash flows.
• Competitive Landscape: User acquisition and retention are crucial; competitive pressures may impact revenue.
• Partnership Sustainability: Maintaining relationships with restaurants and merchants is vital; pricing pressures could affect order volumes.
• Operational Management: Effective management of Dark Stores is essential to prevent service disruptions.
• Regulatory Risks: Changes in e-commerce regulations could pose challenges to Swiggy’s business model.

Future Growth Plans

Swiggy aims to fortify its market position through various growth strategies, including:

• Expanding product offerings and partner networks to enhance user convenience.
• Growing the Dark Store network for improved product selection and delivery efficiency.
• Optimising operations and expanding high-margin offerings to improve contribution margins.
• Strengthening technology and refining last-mile delivery for better scalability.
• Implementing targeted marketing and data-driven strategies to increase brand recall and engagement.

With a robust foundation and exciting growth potential, Swiggy’s upcoming IPO presents a unique opportunity for investors looking to engage in the dynamic landscape of on-demand delivery services. As Swiggy approaches its IPO, savvy investors should utilise a reliable share market app to stay informed and manage their investments.

Applying for Swiggy’s IPO with HDFC Sky’s One-Click Feature

Investing in Swiggy’s IPO is simplified through HDFC Sky’s One-Click feature, providing a fast and efficient application process. Here’s how you can easily apply:

1. Log Into HDFC Sky: Start by accessing your account with your login details.
2. Access the IPO Section: Click on “IPO” under “Indian Stocks” in your profile menu.
3. Choose Swiggy IPO: Find Swiggy in the IPO offerings and select “Apply Now.”
4. Enter Your Bid: Input your desired bid amount and customise your application according to your preferences.
5. Select Payment Method: Opt for UPI as your payment choice.
6. Authorise Payment: Open your UPI app to approve the payment mandate.
7. Submit Your Application: Finalise your submission by placing the order.

Benefits of Using HDFC Sky’s One-Click IPO Feature:

• Streamlined Application: Submit your application with just one click, significantly reducing paperwork.
• Real-Time Updates: Get instant notifications regarding your application status and any refunds.
• All-in-One Management: Keep track of all your IPO investments from a single platform.
• Flexible Application: Apply from anywhere using the HDFC Sky app or website.

With HDFC Sky’s One-Click feature, the process of applying for Swiggy’s IPO is effortless and efficient. Seize this opportunity to invest wisely!