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Monday, July 15, 2024

A New Chapter for Swiggy – Move Towards IPO

Swiggy, the recognized food delivery giant organization, is set to make a notable mark on the market through an upcoming Initial Public Offering (IPO). Since its launch in 2014, Swiggy has emerged as a leading player in India’s food delivery and commerce industries, positioning itself as a competitor to the recently listed company Zomato. This event showcases Swiggy’s strategic preparedness to enter public markets, marking a milestone in India’s startup ecosystem. Swiggy is looking for fundraising to fuel its business expansion, with a notable shift towards positioning itself as a logistics firm rather than solely a food delivery platform. With a strong market presence and rapid expansion efforts, Swiggy is looking to capitalize on potential revenue and profitability growth.

The current reorganization has highlighted the company’s readiness for an upcoming IPO. In a recent meeting, Co-founder Sriharsha Majesty and Nandan Reddy were named executive directors, with Majesty taking on managing director and Group CEO responsibilities. The structural adjustments are Swiggy’s dedication to strengthening the leadership cadre as it prepares for the intricacies of going public. 

Swiggy’s transformation from a food delivery startup to a significant player in quick commerce has been awe-inspiring. Apart from encountering fierce competition with Zomato, Swiggy has secured a notable portion of the market, mainly because of its inventive business approach and commitment to customer satisfaction. Swiggy holds approximately 45% of the Indian food delivery market, serving a monthly user base of 16 to 17 million transacting customers. The delivery operation spans across 600 cities in India and played a crucial role in generating substantial revenue, strengthening the overall profitability. 

Is Swiggy Profitable?

Swiggy has constructed a grocery delivery section from scratch, whereas Zomato has opted to acquire one. However, these endeavors come with significant expenditure. Losses, excluding interest, tax, depreciation, and amortization, surged by 33% to $404 million in the fiscal year concluding in March 2023. A Dutch-listed company, Prosus, is the largest investor of Swiggy as it owes 33% of its shares. Softbank, on the other hand, is the second largest stakeholder; other shareholders are Accel, Elevation Capital, DST Global, and Hillhouse Capital Group. 

The forthcoming public listing of Swiggy shares is of significant importance to Prosus, particularly given its setback with the Indian education-tech company Byjus. While new funding would drive Swiggy’s growth, it also raises concerns about the possibility of price competition. Zomato acknowledged offering memberships to food delivery services at lower prices than anticipated. Considering Swiggy’s lofty valuation, the investors are eager for tangible outcomes. Swiggy’s IPO would compromise a combination of fresh shares worth Rs3,750 crore and an offer-for-sale (OPS) of shares valued at Rs 6,664 crore.

Moreover, Swiggy might aim to raise Rs 750 crore from anchor investors through a pre-IPO round. Swiggy also showcased a loss of $207 million for a 90-month tenure ending December 2023, with a revenue of $1.02 billion. Before this, for the full fiscal year 2022-23, the company reported a loss of $501 million on operating revenue of $992 million. 

ConclusionSwiggy has changed the landscape to a publicly traded entity, marking a significant milestone in its journey of expansion and evolution. Swiggy would ensure consistent profitability and operational effectiveness as the competitors aim to achieve profitability. This strategic focus strives to instill confidence among investors amidst a dynamic landscape of the food delivery market. Swiggy’s IPO showcases a significant milestone within the startup ecosystem. It offers a chance to invest in a burgeoning business, albeit accompanied by inherent risks typical of any IPO. Therefore, it is imperative to analyze available information and Draft Red Herring Prospectus (DRHP) before making a well-informed investment decision. Stockify fulfills every need of pre ipo shares investors, making stock trading accessible and convenient for all. 

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