Despite a downturn in the broader Indian market, Swiggy's stock outperformed expectations, particularly for a company that has yet to turn a profit, following its $1.4 billion initial public offering (IPO), which stands as the second largest in the country this year.
The stock debuted at 420 rupees ($4.98) on the National Stock Exchange of India and peaked at 448 rupees, resulting in a valuation of nearly $12 billion for the company.
Swiggy, along with its primary competitor Zomato, is capitalizing on a surge of new customers in India by providing "quick commerce" grocery deliveries within a 10-minute timeframe, expanding beyond their core food delivery services.
This rapid growth in quick commerce has negatively impacted supermarket sales, prompting industry leaders, including Mukesh Ambani, Asia's wealthiest individual, to introduce expedited delivery options from his retail outlets in India.
Anand Kripalu, a board member of Swiggy, noted at the listing ceremony in Mumbai that the company's quick commerce service, Instamart, has experienced "explosive growth."
Dutch tech investor Prosus, which holds a 25% stake in Swiggy, announced on Wednesday that it has realized $2 billion from its investment in the company, while SoftBank retains approximately an 8% share.
The IPO arrives amid ongoing antitrust investigations into both Swiggy and Zomato regarding potential violations of competition laws in the food delivery sector, as well as requests from retail associations for inquiries into their quick commerce operations for alleged predatory pricing practices.
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| Managing Director and Group Chief Executive Officer of Swiggy, Sriharsha Majety and Managing Director and CEO of National Stock Exchange of India Ashishkumar Chauhan ring the bell during the listing ceremony of its Initial Public Offering (IPO) at the National Stock Exchange (NSE) in Mumbai, India, November 13, 2024. REUTERS/Francis Mascarenhas © Thomson Reuters |
Last week, Swiggy's IPO was oversubscribed by more than three times, driven by a surge of institutional investors placing orders on the final day of the offering.
Swiggy's initial public offering does not match the remarkable success of Zomato's listing in 2021, where Zomato's stock has more than tripled in value since that time.
Although Swiggy has managed to reduce its annual losses, it has not yet achieved profitability, in contrast to Zomato, which reported a profit for fiscal year 2024 following a loss the previous year.
Shivani Nyati, head of wealth at Swastika Investmart, noted that "the company's ongoing losses and the tough market environment could dampen long-term investor interest."
Macquarie Capital projects that Swiggy's food order values for 2024-25 will reach $3.3 billion, approximately 25% lower than Zomato's figures.
In the quick commerce industry, total annual sales across the country are expected to surpass $6 billion this year, with Zomato's Blinkit holding nearly 40% of the market share, while Swiggy accounts for about 30%, according to research from Datum Intelligence.