Food delivery giant Swiggy has taken a significant step towards going public. On Thursday, September 26, Swiggy updated its draft red herring prospectus (UDRHP) with SEBI (Securities and Exchange Board of India), providing further details about its much-anticipated Initial Public Offering (IPO).
This move is expected to attract substantial interest from those keen on share market investment. The IPO will include a fresh issue of equity shares worth ₹3,750 crore and an offer-for-sale (OFS) by existing shareholders.
Breakdown of Swiggy’s fresh issue and offer-for-sale
Swiggy's IPO is structured with both a fresh issue and an OFS. The fresh issue, valued at ₹3,750 crore, aims to raise new capital for the company, while the OFS will involve the sale of 18.52 crore equity shares from current investors.
Shareholders participating in the OFS include Accel India IV (Mauritius) Ltd, Apoletto Asia Ltd, Alpha Wave Ventures, LP, Tencent Cloud Europe BV, and others. Investors tracking share market investment opportunities will find this IPO a key event, as Swiggy's growth trajectory in India’s fast-paced food and grocery delivery sector has been substantial.
Potential upsizing of the fresh issue
Swiggy is considering increasing the size of the fresh issue by another ₹5,000 crore, which could bring the total fresh issue to ₹11,600 crore. A final decision regarding this upsizing will be made during the company’s extraordinary general meeting (EGM) in the first week of October.
This strategic move could further boost the company's financial reserves and make it an appealing choice for those involved in share market investment.
Allocation of funds from the fresh issue
The proceeds from the fresh issue will be used to fund several key projects and reduce debt. Approximately ₹137.41 crore will be allocated to repay the debt of Scootsy, one of Swiggy's subsidiaries. Moreover, ₹982.40 crore will be invested in expanding the Quick Commerce segment through Scootsy’s Dark Store network, a crucial part of Swiggy’s business model.
Of this, ₹559.10 crore will be used for setting up Dark Stores, while ₹423.30 crore will go toward lease or licence payments. These strategic investments highlight Swiggy's long-term vision, making it a potential candidate for share market investment portfolios.
Technology, marketing, and growth plans
In addition to expanding the Dark Store network, Swiggy will allocate ₹586.20 crore towards enhancing its technology and cloud infrastructure. The company also plans to spend ₹929.50 crore on brand marketing and business promotions to maintain its competitive edge in the food delivery space.
A portion of the funds will be used for general corporate purposes and inorganic growth, which signals that Swiggy is preparing for expansion beyond its core operations. This diversified strategy should appeal to those who see share market investment in growth-oriented companies as a rewarding opportunity.
Financial performance of Swiggy
Swiggy's financials have improved significantly over the past year, making the IPO an intriguing prospect for share market investment enthusiasts. In FY24, the company reported a net loss of ₹2,350 crore, a reduction of 44% compared to the ₹4,179 crore loss in FY23.
The company's revenue rose by 36% to ₹11,247 crore in FY24, up from ₹8,265 crore the previous year. Gross order value (GOV) increased by 26%, reaching $4.2 billion, and monthly transacting users rose to 14.3 million.
This substantial improvement in financials reflects Swiggy’s strategic shifts and reduced investments in Instamart, its quick grocery delivery service. As a result, the company is on a clear path toward profitability, positioning itself as an attractive option for share market investment.
Comparison with competitors
Swiggy's competitor, Zomato, has also seen significant financial growth. In Q1 FY25, Zomato reported a 126% increase in net profit, reaching ₹253 crore, compared to ₹2 crore in the same period last year.
Additionally, Zomato's revenue grew by 74%, reaching ₹4,206 crore. While both companies have shown strong financial improvements, Swiggy’s diversified business model and long-term growth plans make it a notable player for those looking into share market investment.
Ready to invest?
Swiggy's upcoming IPO, with a fresh issue of ₹3,750 crore, offers a valuable opportunity for share market investment. With strategic investments in technology, brand promotion, and business expansion, Swiggy is positioning itself for sustained growth.
As the company moves closer to profitability, its IPO is set to attract significant attention from investors. Keep an eye on this IPO if you’re interested in tapping into the potential of India’s booming food delivery industry through share market investment.
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