Swiggy, India’s leading food delivery platform, has made a significant move ahead of its much-anticipated IPO. At the Extraordinary General Meeting (EGM) held on October 3, 2024, shareholders approved an increase in the size of the company’s primary issue from ₹3,750 crore to ₹5,000 crore. This comes as Swiggy prepares for one of the largest new-age IPOs in India, poised to raise up to ₹11,664 crore ($1.4 billion) if the expanded option is fully exercised.
The Offer for Sale (OFS) component remains unchanged at ₹6,664 crore, indicating that while the company is raising additional funds, the shareholding dilution on the part of the existing stakeholders will stay consistent with earlier plans.
This decision to increase the IPO size comes in the wake of intense competition from key industry rivals such as Zomato, Blinkit, Flipkart Minutes, and Tata BigBasket—all of whom are ramping up their operations in the food delivery and quick commerce sectors. Swiggy’s move is seen as a proactive measure to create a cash chest and secure enough liquidity to withstand the pressures of an increasingly competitive marketplace.
A Look Back: Swiggy’s Journey and IPO Plans
Swiggy’s journey has been nothing short of remarkable. Founded in 2014 by Sriharsha Majety, Nandan Reddy, and Rahul Jaimini, Swiggy quickly scaled up from being a food delivery service in Bengaluru to becoming a household name across India. Over the years, Swiggy has diversified into quick commerce (with its service Instamart) and has expanded its offerings with Swiggy Genie, its delivery service for non-food items.
Swiggy’s planned IPO was first revealed in late 2023, at which time the company announced its intention to go public, targeting an IPO size of ₹10,414 crore. However, as competition in the food and quick commerce space has intensified, Swiggy has revisited its IPO size, deciding to raise an additional ₹1,250 crore in primary shares.
The increase in the IPO size is likely aimed at fortifying Swiggy’s balance sheet as it prepares for a public debut in the face of stiff rivalry from Zomato, which has already made significant strides since its own IPO. Zomato went public in July 2021 and has since posted encouraging numbers, boasting revenue of ₹12,114 crore and a profit of ₹351 crore for the fiscal year 2024.
Swiggy’s Financial Health: Past and Present
Swiggy’s financial health has been a hot topic among investors as the company prepares to enter the public market. In FY24, Swiggy reported revenue of ₹11,247 crore, marking an impressive 36% increase from ₹8,265 crore in FY23. Moreover, Swiggy has made great strides in reducing its losses, narrowing them by 44% from ₹4,179 crore to ₹2,350 crore during the same period. This trend reflects a stronger control over expenses and a clear focus on profitability.
However, in Q1 FY25, Swiggy’s strategy of prioritizing growth caused its losses to widen again, rising by 8% to ₹611 crore from ₹564 crore a year ago. The company’s expenses during this quarter ballooned to ₹3,908 crore, up 27% from the previous fiscal’s Q1 expenses of ₹3,073 crore. Despite these growing expenses, Swiggy’s revenue from operations in Q1 FY25 rose by 35%, reaching ₹3,222 crore compared to ₹2,389.8 crore in Q1 FY24.
Swiggy’s competitor Zomato posted much stronger results in the same quarter. Zomato’s revenue surged by 74% year-on-year to ₹4,206 crore, generating a profit of ₹253 crore in Q1 FY25. These figures highlight the fierce competition Swiggy faces as it continues to invest heavily in growth and customer acquisition.
Future Outlook: Swiggy’s IPO and the Road Ahead
The future looks promising for Swiggy, but the road is not without its challenges. By increasing the size of its IPO, Swiggy is making a clear statement: it plans to fight hard in the food delivery and quick commerce space. The additional funds from the IPO will likely be used to ramp up expansion efforts, enhance technological infrastructure, and perhaps even enter new verticals, ensuring that Swiggy maintains its leadership in the ever-evolving Indian market.
The IPO market in India has become increasingly competitive, especially for new-age tech companies like Zomato and Nykaa, both of whom have gone public in recent years. However, with its strong brand recognition, a vast delivery network, and a growing portfolio of services, Swiggy is well-positioned to attract significant interest from both retail and institutional investors.
Experts believe that Swiggy’s IPO could set the tone for future listings in the food delivery and e-commerce sectors, especially as these industries continue to expand in India. While Swiggy’s revenue growth and loss reduction are encouraging, the company will need to demonstrate its ability to sustain profitability, especially in the face of Zomato’s improving financial health.
Competition Intensifies: A Glance at Rival Zomato
Swiggy’s largest competitor, Zomato, has been making waves in the food delivery space and has even diversified into quick commerce through its acquisition of Blinkit. Zomato’s financials have been particularly strong in FY24, posting ₹12,114 crore in revenue and ₹351 crore in profit—a major achievement for a company that faced significant losses in its earlier years.
As of Q1 FY25, Zomato continues to widen its gap with Swiggy in terms of revenue, reaching ₹4,206 crore, while also showing 74% year-on-year growth. Zomato’s focus on efficiency and profitability has given it an edge, and Swiggy will need to leverage its resources to close the gap.
Will Swiggy’s Bold IPO Move Pay Off?
Swiggy’s decision to increase the size of its IPO to ₹5,000 crore reflects its ambitious plans to fortify its position in the market. With growing competition from Zomato, Tata BigBasket, and others, Swiggy must use the additional funds wisely to invest in growth, innovation, and perhaps acquisitions that could give it an edge.
As Swiggy prepares for its public market debut, all eyes will be on how the company manages its growth, handles its competition, and works towards achieving sustained profitability. For now, Swiggy’s shareholders have shown confidence in the company by backing the increased IPO size, and the market eagerly awaits the company’s next moves.
Will Swiggy’s bold IPO decision pay off, or will the competition prove too tough to handle? Only time will tell.