Swiggy IPO Sees Modest Start with 7% Subscription on Day One
Swiggy’s initial public offering (IPO) has received a modest response on the first day of bidding, with a 7% subscription by 12:15 PM on November 6. According to data from the National Stock Exchange (NSE), the company received bids for 1.08 crore shares, against 16 crore shares on offer.
Retail Investors Drive Subscription
Retail individual investors are leading the subscription, with 32% of their quota already filled. In contrast, non-institutional investors have only subscribed 3% of their allocated portion. The IPO will remain open for subscription until November 8, with share allotment scheduled for November 11 and listing on the stock exchanges set for November 13.
Anchor Investors Commit Rs 5,085 Crore
Before opening the IPO to the public, Swiggy raised Rs 5,085 crore from anchor investors. Notable global investors in the anchor round include New World Fund Inc, Government Pension Fund Global, Nomura Funds, Fidelity Funds, BlackRock, and Allianz Global Investors.
The company allocated 13.04 crore shares to 151 funds at Rs 390 per share, aggregating to Rs 5,085 crore. Among the domestic participants, 5.3 crore shares went to 19 mutual funds, including ICICI Prudential Mutual Fund, SBI Mutual Fund, HDFC Life Insurance, and SBI Life Insurance.
Grey Market Indicates Weak Demand
Despite strong participation from anchor investors, the grey market suggests a weak demand for Swiggy shares. The Grey Market Premium (GMP), tracked by platforms like Investorgain and IPO Watch, is currently in the range of Rs 12 to Rs 20, pointing to a potential listing gain of just 3-5%. This suggests a more muted investor sentiment compared to typical high-profile IPOs.
Swiggy IPO Pricing and Valuation
Swiggy’s IPO is priced between Rs 371 and Rs 390 per share and aims to raise Rs 11,327 crore. The offer includes a fresh issue of Rs 4,499 crore and an Offer for Sale (OFS) component of Rs 6,828 crore. At the upper end of the price band, the company’s valuation stands at approximately Rs 95,000 crore. This places Swiggy’s valuation much lower than its competitor Zomato, which has a market cap of Rs 2.13 lakh crore after its IPO in July 2021.
Plans for IPO Proceeds
According to the draft prospectus, Swiggy plans to use the proceeds from the fresh issue for several purposes. These include investments in technology and cloud infrastructure, brand marketing, business promotion, debt repayment, and inorganic growth.
Founded in 2014, Swiggy has seen rapid growth in the food delivery sector but continues to operate at a loss. For the quarter ending June 2024, Swiggy reported a loss of Rs 611 crore. This is a wider loss compared to Rs 564 crore in the same period of 2023.
Conclusion: Cautious Investor Sentiment
Swiggy’s IPO has drawn strong interest from retail and anchor investors. However, the weak grey market premium suggests that investor enthusiasm may be lower than anticipated.
At the higher end of the price band, Swiggy’s valuation places it in competition with bigger players like Zomato. It remains to be seen whether investor sentiment picks up as the subscription period progresses.
