Ten years since its inception, the foodtech and quick commerce giant Swiggy is gearing up for a public debut this year, diligently ensuring a robust financial outlook. Demonstrating consistent growth, the company appears to be maintaining a solid 25-30% year-on-year growth in the current fiscal year, FY24.
In the first nine months of FY24, IPO-bound Swiggy’s revenue from operations stood at INR 5,476 crore, as indicated in a document prepared by an investment banker on behalf of Swiggy.
Of this amount, the food delivery segment accounted for 82.65% of the total operating revenue, reaching INR 4,526 crore. The remaining revenue was generated by Swiggy Instamart, the company’s quick commerce division.
Sources suggest that the company is considering a secondary market transaction to provide exit opportunities for both its early and late-stage investors.
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One of the sources, requesting anonymity, mentioned, “Swiggy is expected to pursue an IPO in the latter half of this year, and the secondary transaction seems to be an effort to refine its cap table.”
Sources indicate that in the possible secondary transaction, Swiggy will be aiming for its final primary valuation.
The document cited above stated, “In August, the company secured INR 384 crore from Ramco Group at a valuation of INR 73,520 crore [$8.85 billion].” Shortly after this investment, the US-based asset manager Baron Capital Group elevated Swiggy’s valuation to $12.1 billion.”
It’s important to mention that Swiggy acquired Lynk Logistics in August 2023, and the aforementioned transaction could be related to this acquisition.
Queries sent to Swiggy did not receive a response.
The document also indicated that in the first nine months of FY24, Swiggy’s gross order value (GOV) reached INR 24,230 crore, of which the food delivery segment accounted for a significant 76.2%, amounting to INR 18,472 crore. The remaining GOV is associated with Instamart.
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With a strong emphasis on profitability, the Bengaluru-based company has notably enhanced its EBITDA margins, which were recorded at -1.9% for the food delivery business and -109.5% for Instamart during the nine-month period. In comparison, these figures were -17.5% and -259% in FY23.
Swiggy’s efforts to streamline costs and prepare for its IPO are becoming increasingly apparent. In January, Snackfax reported that Swiggy intended to reduce its workforce by 6% to cut costs. In February, the company rebranded from Bundl to Swiggy, and more recently, it has shortlisted seven banks, including Kotak Mahindra and JP Morgan, for its financial preparations.
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“Swiggy is expected to file for its IPO by May, with plans to go public during the festive season. The company is eyeing a valuation between $12-15 billion,” said another source who also preferred to remain anonymous. This source added that Swiggy may consider offering a reduced valuation for secondary transactions.
The timing appears favorable, especially as Zomato has performed well since its listing and is on track to reach a $20 billion valuation this week. Even accounting for Zomato’s lead in revenue, a valuation of $12 billion or higher should be attainable for Swiggy after it releases its FY24 financials. However, various factors such as market conditions at the time of the IPO, the proportion of shares offered for sale versus funds raised for the company, and the strategies of competitors like Big Basket or Zepto could influence perceptions of Swiggy’s future profitability. While Zomato has achieved operational profitability, Swiggy was not yet there based on its last reported figures, and this financial deficit is likely to impact its share price unless a visible and consistent turnaround occurs.
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