Leading Indian food aggregator and delivery service, Swiggy, has officially submitted its draft red herring prospectus (DRHP) to the Securities and Exchange Board of India (Sebi), paving the way for its initial public offering (IPO). This move comes at a time when the Indian primary market is experiencing significant growth, with 62 companies, including notable names like Ola Electric and Bajaj Housing Finance, making their public debut this year.
Key Details of Swiggy's IPO
Swiggy's IPO will feature a fresh issue of shares valued at up to ₹3,750 crore, alongside an offer for sale where shareholders will divest up to 185,286,265 equity shares. Key stakeholders participating in the offer for sale include Accel India IV (Mauritius), Apoletto Asia, and Tencent Cloud Europe, among others. The company clarified that it would not receive any proceeds from the offer for sale; rather, the selling shareholders will benefit from the sale of their shares.
The funds raised from the fresh issue are earmarked for several initiatives, including investments in its subsidiary, Scootsy, repayment of borrowings, and expanding its Dark Store network to enhance quick commerce operations. Additionally, Swiggy plans to allocate some proceeds to bolster its technology infrastructure and brand marketing efforts.
According to the DRHP, Swiggy reported a revenue of ₹3,222.21 crore for the first quarter of FY25, up from ₹2,389.81 crore in the same quarter last year. The company’s total revenue stood at ₹11,247.40 crore for FY24. However, total expenses for Q1FY25 rose to ₹3,907.95 crore, up from ₹3,072.56 crore in Q1FY24, indicating a trend of rising costs alongside growing revenues.
The company has outlined several key risks in its DRHP, including the fact that it has incurred net losses each year since its inception. With negative cash flows from operations, Swiggy emphasizes the necessity of generating adequate revenue growth and managing expenses to avoid ongoing financial difficulties. Additionally, its subsidiary, Scootsy, has reported significant losses in recent years, which could impact Swiggy’s overall financial health.
Intense competition from rivals such as Zomato, Blinkit, and others poses another challenge, as Swiggy must continue to differentiate itself in a crowded marketplace.
Growth Opportunities Ahead
Despite these challenges, Swiggy is well-positioned in a rapidly expanding market. According to a Redseer report, the online food delivery sector is projected to grow at a CAGR of 17 to 22%, while the quick commerce market could see growth between 60 to 80% from 2023 to 2028. Swiggy’s innovative approach and early entry into the market have solidified its status as a leader in hyperlocal commerce.
In recognition of its brand strength, the Kantar BrandZ Most Valuable Indian Brands Report 2024 ranked Swiggy as the top brand in the Consumer Technology & Services Platforms category, reinforcing its household name status.
As of June 30, 2024, Swiggy reported a milestone of 112.73 million users who have transacted on its platform, thanks to its unified app and diverse offerings. This achievement highlights the company's commitment to enhancing user experience, which has driven consistent growth in its user base across both food delivery and quick commerce sectors.
With inputs from agencies
Image Source: Multiple agencies
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