Swiggy IPO Analysis: In today’s fast-paced world, convenience is key, and online food and grocery delivery services have revolutionized the way people shop and eat. With just a few taps, customers can enjoy their favorite meals or stock up their kitchens without leaving home. This growing industry thrives on the increasing demand for quick, easy solutions.
As urban lifestyles evolve, more consumers are seeking reliable services to fit their busy schedules. The vast selection of cuisines and products available only adds to its appeal. This sector not only meets daily needs but also transforms dining habits and shopping preferences, creating new opportunities for businesses and consumers alike.
One company potentially gearing up for an IPO is Swiggy. In this article, we will explore the essential information you need to know before considering an investment in the Swiggy IPO.
Swiggy Company Overview
Swiggy, founded in 2014 and headquartered in Bangalore, India, is one of the country’s top food delivery platforms. It connects millions of users with local restaurants, supported by over 380,000 delivery partners nationwide who ensure fast and reliable service. With more than 200,000 restaurant partners, Swiggy offers an extensive variety of cuisines to its customers across 650+ cities in India. The platform has processed over 3 billion orders and continues to grow, meeting the ever-evolving needs of consumers with its user-friendly app and efficient service.
Swiggy provides a range of services to cater to different customer needs:
– Swiggy Food: The core service allows users to explore restaurant listings, browse menus, and easily place orders via the app or website, with timely deliveries ensured by its vast delivery network.
– Swiggy DineOut: Enhances the dining experience by enabling users to discover restaurants, make reservations, view menus, and enjoy discounts, with digital payment options for added convenience.
– Swiggy Instamart: A grocery shopping platform that offers a wide selection of groceries and household items, delivered quickly via Swiggy’s dark stores and delivery network.
– Swiggy Genie: A pick-up and drop-off service within the same city, ideal for sending packages, documents, or personal items conveniently.
– Swiggy Minis: Supports local businesses by providing a platform for mini storefronts, where Swiggy handles logistics, payments, and order management to help small brands reach more customers.
Acquisition:
In 2022, Swiggy made a significant move by acquiring the dine-out startup from Times Internet for ₹960 crore. This acquisition strengthened its presence in the dine-out segment, positioning Swiggy to compete more effectively with its rival, Zomato.
Industry Overview
The online food delivery industry is experiencing rapid growth, driven by its convenience and diverse offerings. As busy lifestyles become more prevalent, an increasing number of people are relying on these services for quick and easy meal options. This shift is fueling a trend where convenience merges with culinary variety, transforming the way people access food.
By the end of 2024, the online meal delivery market is expected to generate $1.2 trillion in revenue, with a compound annual growth rate (CAGR) of 9.04% projected over the next five years. This growth is set to propel the market to $1.85 trillion by 2029.
In India, the grocery delivery sector is anticipated to grow by 30.7% in 2025, reaching $0.77 trillion in 2024. The average revenue per user in this space will be $496 annually. User penetration is projected to reach 26.6% in 2024.
The increasing demand for convenience and the expanding variety of cuisines are major factors driving the growth of India’s online food delivery market. With urbanization and technological advancements further fueling this expansion, the industry presents exciting opportunities for both investors and entrepreneurs.
Financial Highlights
The company has experienced substantial revenue growth in recent years, rising from ₹2,547 crore in March 2021 to ₹11,247 crore in March 2024. This consistent increase highlights the company’s expanding market presence and operational growth. However, despite the significant revenue boost, the company continues to report net losses, though these losses are narrowing. The net loss decreased from ₹4,179 crore in March 2023 to ₹2,350 crore in March 2024.
EBITDA figures have also been negative but are improving. In March 2021, EBITDA stood at -₹1,348 crore, worsening to -₹4,276 crore in March 2023, before improving to -₹2,208 crore in March 2024. The EBITDA margin reflects this recovery, climbing from -64% in March 2022 to -20% in March 2024, indicating gradual progress towards operational efficiency.
Earnings per share (EPS) have shown positive movement, improving from -₹18,168 in March 2021 to -₹0.15 in March 2024. This upward trend suggests a potential turnaround, as the company reduces losses and continues to grow its revenue.
Swiggy’s Performance and Future Plans
Swiggy’s gross order value (GOV) exceeded $4.2 billion (₹35,148 crore), with the platform reaching 1.43 crore monthly transacting users (MTUs). In comparison, Zomato’s GOV was $5.85 billion (₹48,952 crore) with 1.9 crore MTUs. Swiggy’s average order value (AOV) in FY24 was ₹428, compared to Blinkit’s AOV of ₹617.
The rise in food delivery orders is crucial for Swiggy’s path to profitability. To boost revenue, the company also introduced a platform fee of ₹6 per order.
Swiggy is reportedly planning to raise around ₹11,000 crore through a potential public offering, with proceeds that match its FY23 revenue. The company is set to exceed its previous revenue records in FY24, signaling strong growth and a solid financial outlook for the upcoming year.
Competitors
Zomato and Swiggy continue to be major competitors in India’s food delivery sector, each offering a wide range of restaurant choices and rapid delivery. Both platforms actively seek to attract customers with attractive discounts and unique features. Here’s a quick overview of their financial performance for FY23 and FY24.
Revenue Comparison
Swiggy’s revenue grew from ₹8,265 crore in FY23 to ₹11,247 crore in FY24. Meanwhile, Zomato saw a more significant increase, with revenue rising from ₹7,079 crore in FY23 to ₹12,114 crore in FY24, surpassing Swiggy’s growth trajectory.
Net Profit Comparison
Swiggy’s net loss narrowed, improving from -₹4,179 crore in FY23 to -₹2,350 crore in FY24. On the other hand, Zomato reversed its fortunes, transitioning from a net loss of -₹971 crore in FY23 to a net profit of ₹351 crore in FY24, marking a notable turnaround.
EBITDA Comparison
Swiggy’s EBITDA loss decreased from -₹4,276 crore in FY23 to -₹2,208 crore in FY24. In contrast, Zomato achieved a positive EBITDA, improving from -₹1,211 crore in FY23 to ₹43 crore in FY24, showcasing stronger operational performance.
EBITDA Margin Comparison
Swiggy’s EBITDA margin improved from -52% in FY23 to -20% in FY24. Zomato experienced an even greater improvement, moving from -17% in FY23 to breaking even at 0% in FY24, signaling improved operational stability.
Earnings per Share Comparison
Swiggy’s earnings per share (EPS) improved from -₹2.68 in FY23 to -₹0.15 in FY24. Zomato outpaced this growth, increasing its EPS from -₹1.2 in FY23 to ₹0.4 in FY24, reflecting a stronger return for its shareholders.
Shareholding Pattern
Prosus, a Dutch-listed firm, holds the largest stake in Swiggy with a 33% ownership. SoftBank follows closely behind, with Elevation Capital, Tencent, and Accel also among the key shareholders. Other investors include Meituan, Alpha Wave Global, DST Global, Qatar Investment Authority, and Coatue. Additionally, GIC, Hillhouse Capital Group, and Invesco have also contributed.
As for Swiggy’s co-founders, Rahul Jaimini, Nandan Reddy, and Sriharsha Majety, they hold 4.2%, 1.6%, and 1.2% of the company, respectively, according to Tracxn. ET reports that Jaimini stepped down from his operational role in 2020 to focus on his new venture, Pesto Tech.
IPO Buzz: Swiggy Sets the Stage for a Big Debut
Swiggy, the popular food delivery platform, is generating a lot of excitement as it gears up for its initial public offering (IPO). In the unlisted market, the company’s shares have surged nearly 40% in just two months, reaching around ₹490. This price hike has catapulted Swiggy’s market value from ₹70,000 crore to ₹1.16 lakh crore. The current lot size for Swiggy shares in the unlisted market stands at around 100 shares.
Adding to the buzz, several prominent figures have reportedly purchased pre-IPO shares of Swiggy, including cricketer Rahul Dravid, actor Amitabh Bachchan, and filmmaker Karan Johar. Their involvement has heightened interest ahead of the company’s IPO in November.
Swiggy is aiming to raise approximately ₹11,000 crore from its public offering. This includes a fresh equity sale of ₹3,750 crore and an offer-for-sale (OFS) component of up to ₹6,664 crore. The company’s financials are showing improvement, with a 36% rise in operating revenue to ₹11,247 crore and a 44% reduction in net losses to ₹2,350 crore for fiscal year 2024.
Conclusion
Swiggy’s upcoming IPO is creating a buzz in the market, driven by strong revenue growth and a reduction in losses. The company’s share price in the unlisted market has experienced a notable surge, with high-profile investors backing its pre-IPO shares. Swiggy aims to raise a considerable sum through its public offering.
Despite this, Swiggy faces fierce competition from Zomato, which has already reached profitability. The food delivery sector in India is growing rapidly, and Swiggy’s IPO could prove to be a key event for investors looking to tap into this expanding industry.
