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Swiggy sees 15% surge in IPO debut

Sandra Wheelston
November 14, 2024
Swiggy IPO
Swiggy IPO
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Swiggy, the Indian food delivery giant, made a stellar debut on the National Stock Exchange (NSE), with shares surging 15% as trading commenced. The strong investor interest was driven by growing confidence in the burgeoning quick-commerce and food delivery markets. Sriharsha Majety, Swiggy’s Managing Director and Group Chief Executive Officer, alongside Ashishkumar Chauhan, Managing Director and CEO of the National Stock Exchange of India, rang the opening bell during the listing ceremony of Swiggy’s Initial Public Offering (IPO) in Mumbai.

Swiggy’s IPO, which garnered $1.4 billion, received a strong response from large investors. With its market debut, Swiggy’s valuation soared to nearly $12 billion.

Prosus NV, a major investor in Swiggy, reported a $2 billion return on its investment.

The successful IPO and subsequent market performance highlight investor optimism about Swiggy’s growth trajectory in the quick-commerce and food delivery segments. Swiggy’s debut is also a major liquidity event for its backers, including Prosus, SoftBank, and Accel. Notably, about 5,000 employees are expected to collectively reap approximately $1 billion.

The firm’s market capitalization surged to $12.32 billion following the IPO. Swiggy co-founder and CEO Sriharsha Majety emphasized the significance of this moment in his post-listing remarks: “One of the things I am most excited about is that Swiggy itself is happening at an incredible time. When we look at the next one to two decades, I think it’s India’s next two decades.

There’s so much economic growth in front of us.

Swiggy’s strong IPO market debut

The Indian pride is at an all-time high.”

Swiggy enters the public markets during a pivotal period for India’s e-commerce sector.

The company, which is India’s second-largest food delivery platform with 14 million monthly active users, still trails market leader Zomato across key performance metrics. According to Macquarie, Swiggy’s annualized gross order value of $3.3 billion in food delivery is about 25% behind Zomato’s. The competition intensifies further in the quick-commerce sector—a fast-growing market for rapid deliveries of groceries, wellness, beauty products, and more.

Swiggy’s Instamart service, with 5.2 million monthly users, lags behind Zomato-owned Blinkit’s 7.6 million users. More critically, while Blinkit has reached adjusted EBITDA break-even, Instamart continues to incur losses even at the contribution margin level. Nonetheless, the future holds substantial opportunities.

Morgan Stanley estimates gross order values in India’s quick-commerce market could reach $42 billion by 2030, representing over 18% of the country’s total e-commerce market. This sector has already been expanding at a rapid pace of 77% annually since the pandemic. JPMorgan indicates quick-commerce platforms have captured 56% of the online grocery market from traditional e-commerce players.

However, competition remains fierce. Traditional retail giants like Flipkart and Reliance’s JioMart are also launching rapid delivery services. Moreover, there are questions regarding the viability of the quick-commerce model outside major urban centers, considering its reliance on dense networks of small warehouses.

Swiggy’s much-anticipated stock market debut on Wednesday also catapulted over 500 current and former employees to the “crorepati” club, with the food delivery and quick commerce major’s listing poised to unlock Rs 9,000 crore in ESOPs for 5,000 staffers, people aware of the details said.

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