Swiggy, the leading foodtech company, is gearing up for its IPO, with plans for its stock market launch set for after the upcoming general election. The company recently went public and has now chosen bankers to handle the IPO syndicate.
While Snackfax reported the company’s transition to a public entity and its financial performance for three quarters of FY24, wealth managers representing Swiggy are offering a pre-IPO deal to high net-worth individuals (HNIs), proposing to sell shares at a 20% discount based on its current valuation, as reported by Entrackr, citing three informed sources.
Continue Exploring: Swiggy transitions to publicly traded company ahead of $1 Billion IPO
“The company is offering shares at INR 350 each, with a valuation of INR 80,000 crore ($9.6 billion), which represents approximately a 20% discount,” said one of the sources requesting anonymity.
According to sources, Swiggy’s current valuation is approximately INR 1,00,000 crore (over $12 billion). “The minimum investment in the round is INR 25 lakh,” stated the aforementioned source.
It’s noteworthy that the US-based investor Invesco recently increased Swiggy’s valuation to $12.7 billion, signaling a positive outlook for the food tech company. This marks the second valuation increase by Invesco and the third overall for the Bengaluru-based foodtech decacorn.
Continue Exploring: Invesco marks IPO-bound Swiggy’s valuation at $12.7 Billion, up 18% from last fundraise
Queries directed to Swiggy did not receive an immediate response.
During the first three quarters of the financial year FY24, Swiggy recorded INR 5,476 crore in revenue from operations and a loss of INR 1,600 crore. In the fiscal year ending March 2023, its revenue and losses were INR 8,265 crore and INR 4,179 crore, respectively.
Meanwhile, Zomato, Swiggy’s competitor, reported revenue from operations of INR 8,552 crore in the first three quarters of FY24. Since its public debut in 2021, the company also recorded a profit of INR 178 crore during the same period. Currently, Zomato has a market cap of approximately $20.7 billion.
Continue Exploring: Zomato reports third consecutive profitable quarter with INR 138 Cr PAT in Q3 FY24
Nevertheless, Swiggy is moving forward with its IPO plans, as market sentiments seem to be turning more positive after a year characterized by a ‘funding winter’. This optimism is reflected in the recent valuation increases of several startups, including Meesho, PineLabs, FirstCry, and Ola Electric, all of which are preparing to go public either this year or early next year.
While Zomato’s impressive financial turnaround might offer some optimism to Swiggy’s investment bankers, they are likely aware that Zomato’s resurgence is largely driven by the strong performance of Blinkit, its quick delivery platform. In contrast, Swiggy’s Instamart has not performed as well in the market.
Further casting doubt on the potential for immediate profits from the IPO is the issue of cumulative losses, unlike Zomato’s situation. It appears quite likely that a successful IPO for Swiggy will be followed by at least a year or more of losses, or at best, subdued growth if it opts to minimize losses.
The current $12 billion valuation in private markets seems overly optimistic. Perhaps a more accurate reflection of the company’s value will emerge in FY26 rather than FY25, if at all.
Continue Exploring: IPO-bound Swiggy appoints Titan’s Suparna Mitra as independent director
