Swiggy IPO Nov 6 : Should You Invest? Key Insights and Analysis on India's Second-Largest Food Delivery IPO

Swiggy, one of India’s largest food delivery platforms backed by SoftBank, is all set to make its public debut on November 6.

Swiggy IPO Nov 6 : Should You Invest? Key Insights and Analysis on India's Second-Largest Food Delivery IPO

Swiggy, one of India’s largest food delivery platforms backed by SoftBank, files for a Rs 8,000 crore public listing. The IPO price band will be Rs 371 to Rs 390 per share and the minimum lot size will be 38 shares, meaning that retail investors would need to invest at least Rs 14,820. This is one giant event for India’s young, emerging tech-driven food and quick commerce sectors. Here is a preview of Swiggy’s business model and strategic growth, along with possible reasons to invest for anyone looking to make an investment. Here’s the Swiggy IPO listing date: What investors can expect

Swiggy’s IPO would consist of fresh equity issuance of Rs 4,499 crores plus an Offer for Sale by existing shareholders of about 17.5 crore shares. The new issues are expected to bring in the new money as it will grow both its core food delivery business and also the rising quick commerce segment. It was one of the reasons cited by Swiggy’s CFO Rahul Bothra when the company reduced the size of its OFS because of its increase in primary offering of 20 percent, reducing the valuation from an estimated $15 billion to $11.3 billion. Its shareholders have been accommodating, understanding that the firm had traveled a long distance since its inception in 2015.

Why Should I Invest in Swiggy's IPO?

According to Swiggy’s management, this IPO is a good opportunity for investors seeking long-term growth in India’s consumption-driven economy. Here are some key factors that may make Swiggy an attractive investment:

1. Growth in Consumption Across India

Consumption growth for the next two decades would be the secular story of India, said Sriharsha Majety, Swiggy’s Managing Director and Group CEO. As there is food delivery and a quick commerce business in itself, investors can latch into this story because it was expected to grow along with the increasing consumer demand on these businesses.

2. Resilient Food delivery business

Swiggy’s bread and butter are food delivery, which remain healthy and growing-margin business.

Swiggy should continue to see these margins last because even as it continuously improves the model, that will remain very competitive in the near term. This stability in growth should be a sweet message to long-term investors. As the food delivery business takes off, steady and adequate revenues should start coming in to expand further.

3. Quick Commerce Emerges

There, the big bets are from the house of Swiggy where quick commerce is something through which hyper-growth in the coming years will happen. So, the company competes against those established players such as BigBasket and Dunzo as it targets customers who prioritize convenience in receiving things delivered quicker and faster. While at the same time, partnering with more than 20 FMCG brands, the company recently acquired Link-an end-to-end B2B distributor-to strengthen its reach to the local ‘kirana’ store thereby diversifying its market presence while, at the same time capitalizing on Swiggy’s vast logistics network as an additional revenue stream.

IPO Structure and Allocation

Swiggy will retain 75% of the net offer for Qualified Institutional Buyers, and 15% will be allocated to Non-Institutional Investors. 10% is kept for the retail investors. The above is in the traditional order to ensure diversification. In addition, Swiggy will offer retail shareholders certain preferential benefits on regulatory approval. This may lead to more individual investor benefits.

Risks to be considered:

The company finds itself in a relatively competitive space with other companies such as Zomato, the closest competitor in India’s food delivery market. On top of that, the quick commerce segment is partly emerging and has witnessed closures of many stores, meaning that the decision by Swiggy here might come along with its own set of challenges. By nature, any IPOs carry inherent risk, and the return may not always be forthright.

Last Word: Do You Invest?

If you’re an investor looking for a bet on increasing consumption in India and willing to wait for a more extended period, then you would want to invest into the IPO of Swiggy. Having the parent core food delivery business having staying power and profitability, this firm has tremendous play on the hyper-growth that can be seen from quick commerce.
Yet, any investor would have to weigh the risks against his or her financial goals before making a call. Consider, for instance, the IPO opportunity as Swiggy entering into the dynamic and expanding Indian consumer market. Its success will depend on how well Swiggy manages growth along with operational efficiency on its journey as a public-listed company.

Disclaimer:

All above recommendations are of the market analysts. Neither the author, nor the brokerage firm, nor Stockstoday.in will be responsible for any loss arising out of any such decision taken based upon this information. All users are cautioned to take their own expert advice prior to making any investment decision.

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