How Swiggy Got Its IPO Right: Key Takeaways for Aspiring Businesses

Swiggy, India’s renowned food and grocery delivery platform, launched a successful Initial Public Offering (IPO) on November 13, 2024. Here’s a look at the meticulous planning and strategy behind its IPO and what businesses can learn from it to make their IPO journey smooth and successful.

IPO Snapshot

• Timeline: November 6-8, 2024 (Opening and Closing Dates), Allotment on November 11, Listing on November 13

• Financial Highlights (as of June 30, 2024):

  • Revenue: ₹3,310.11 crore

  • Net Loss: ₹611.01 crore

  • Total Assets: ₹10,341.24 crore

  • Net Worth: ₹7,444.99 crore

• Price and Lot Details:

  • Price Band: ₹371 to ₹390 per share

  • Face Value: ₹1 per share

  • Lot Size: 38 shares

    • Minimum Investment: ₹14,820 (at the upper price band)

• Issue Size: ₹11,327.43 crore, with ₹4,499 crore as fresh issue and ₹6,828.43 crore in Offer for Sale (OFS)

• Pre-IPO Valuation: Approximately $12 billion

• Subscription Details:

  • Overall Subscription: 3.59 times

    • QIBs: 6.02 times

    • NIIs: 0.41 times

    • RIIs: 1.14 times

    • Employees: 1.65 times

• Post-IPO Shareholding:

  • Pre-IPO Shares: 2,123,066,748

  • Post-IPO Shares: 2,238,425,722

  • Dilution Due to Fresh Issue: Approximately 5.15%

• Utilization of Proceeds:

  • Investment in Subsidiary (Scootsy): ₹982 crore

  • Expansion of Dark Store Network: ₹755.4 crore

  • Lease/License Payments for Dark Stores: ₹423.3 crore

  • Technology and Cloud Infrastructure: ₹703.4 crore

  • Brand Marketing and Business Promotion: Allocated funds for enhancing brand awareness

  • Debt Repayment: Partial repayment of certain borrowings

  • Inorganic Growth: Funding for potential acquisitions

• Listing Performance:

  • Listing Date: November 13, 2024

  • Listing Price: ₹420 per share

  • Closing Price on Listing Day: ₹456 per share

  • Market Capitalization Post-Listing: Over ₹1 lakh crore

• Investor Allocation: 

  • Qualified Institutional Buyers (QIBs): 75%

  • Non-Institutional Investors (NIIs): 15%

  • Retail Individual Investors (RIIs): 10%

  • Employee Reservation: 750,000 shares at a ₹25 discount per share

Swiggy’s Success: A Summary of Results

Swiggy’s IPO was oversubscribed 3.59 times, led by strong demand from Qualified Institutional Buyers (QIBs), who subscribed 6.02 times. The IPO closed with a 15% gain on the first day, reflecting positive investor sentiment. This achievement is the result of strategic steps Swiggy took to build a compelling market case.

What Swiggy Got Right: Lessons for Aspiring IPOs
 

1. Timing and Market Positioning

Swiggy’s IPO launch was meticulously timed to leverage the rising interest in India’s digital economy. With a focus on food delivery and a growing quick commerce sector, Swiggy strategically positioned itself to capitalize on investor interest in scalable e-commerce models. Businesses planning an IPO should similarly assess market dynamics and align their offerings with emerging opportunities.
 

2. Engaging Institutional Investors

Swiggy’s IPO saw strong support from major institutional investors, like Fidelity and Norges Bank, which bolstered market confidence. High QIB participation indicated trust in Swiggy’s growth potential and stabilized demand across the IPO. Engaging anchor investors provided a solid foundation, sending a strong signal of stability and promise.
 

3. Transparency in Fund Utilization

Swiggy detailed clear, strategic uses for the funds raised through the IPO:

• Expansion of Dark Stores: ₹755.4 crore to boost infrastructure for rapid deliveries.

• Lease Payments: ₹423.3 crore designated to sustain operations.

• Technology and Cloud Improvements: ₹703.4 crore to enhance user experience.

• Marketing & Promotions: To strengthen brand presence.

This transparent approach reassured investors of Swiggy’s focused growth plans and strategic financial management.
 

4. Balanced and Attractive Pricing

Swiggy carefully priced its shares between ₹371 and ₹390. The listing at ₹420, a 7.69% premium, and closing at ₹464 (19% higher) reflected positive market reception, highlighting Swiggy’s strategic pricing approach. This pricing allowed for accessible entry points while also reinforcing Swiggy’s value.
 

5. Growth Potential in Financial Performance

Despite losses, Swiggy showed robust revenue growth and narrowed its deficit, painting a picture of profitability on the horizon. Its strong financial performance, particularly in the quick commerce segment, appealed to growth-focused investors who valued Swiggy’s market position and expansion capability.
 

6. Maintaining Effective Communication and Transparency

Swiggy’s transparency in its Draft Red Herring Prospectus (DRHP) allowed investors to understand its core offerings, financials, and growth strategy. This open approach built trust, ensuring investors could make informed decisions.

What CorpZo Offers for Your IPO Journey

Swiggy’s IPO success illustrates that a well-executed IPO is about more than just valuation. It requires positioning, timing, clarity on fund utilization, and a strong institutional base. At CorpZo, we specialize in helping businesses navigate the IPO landscape with expertise in:

• Market Timing Analysis: Assessing ideal launch windows.

• Investor Relations: Building confidence with QIBs and retail investors alike.

• Pricing Strategy: Assisting in setting an attractive and balanced price band.

• Financial Narratives: Highlighting growth potential to attract long-term backers.

• Full-Service IPO Support: From document preparation to post-IPO compliance, ensuring every detail aligns with regulatory and market expectations.

Swiggy’s IPO journey serves as an inspiring guide for companies planning to go public. With CorpZo’s guidance, you can craft a strategic IPO plan that mirrors these best practices, positioning your business for success on the public market.

Ready to begin your IPO journey? Connect with CorpZo today and let us help you chart a course to a successful public offering.