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  4. Swiggy sets IPO price band between Rs 371-390/share; offer likely to open on November 6th. Here's all you need to know

Swiggy sets IPO price band between Rs 371-390/share; offer likely to open on November 6th. Here's all you need to know

Swiggy sets IPO price band between Rs 371-390/share; offer likely to open on November 6th. Here's all you need to know
Three years after rival Zomato went public, raising Rs 9,375 crores, food and grocery delivery behemoth Swiggy is set to open for subscription on the Indian bourses between November 6th and 8th, 2024. Looking to raise Rs 11,327.43 crore from the markets, Swiggy has set a price band of Rs 371 to Rs 390 per share. The company is targeting a valuation of $11.3 billion, around 25% down from its initial target of $15 billion.

The issue comprises Rs 4,499 crore worth of fresh issue, with the remaining Rs 6,828.43 crore coming via OFS (offer for sale), with stakeholders like Prosus offloading about 5.2% of their stakes, which could translate into proceeds worth $510 million.

The offer will conclude on November 8, and listing is tentatively scheduled for November 13, 2024. Other stakeholders who will be participating in the OFS at the present valuation include Accel, which will sell around $60 million worth of their stake. Elevation Capital and Tencent's stake sale could earn them up to $30-35 million each.

Swiggy's CEO Sriharsha Majety and co-founder Nandan Reddy are also expected to offload their shares. Currently, they hold 6.23% and 1.76% stakes in the company, respectively. The sale of around 0.1% stake by each is expected to earn them about $14 million in total. Notably, the company does not have any identifiable promoters, as per SEBI ICDR Regulations and the Companies Act 2013.

From funds raised via IPO, the company plans to allot Rs 1,648 million for repaying borrowings made by its subsidiary, Scootsy. The app, which operated independently of Swiggy, offered food delivery services from a selected list of high-end bakeries and restaurants in the city.

Notably, Swiggy had acquired Scootsy in 2018 at a reported valuation of Rs 50 crore. However, Swiggy's foray into the premium-food delivery segment did not pan out well, and the company decided to shut Scootsy in 2020. However, per the company's RHP (red herring prospectus), Swiggy is planning to reinvest and revive Scootsy for extending their dark store network and making lease/license payments for the same.

About Rs 11,787 million would be utilised for expanding Swiggy's dark store network for its quick commerce wing, Instamart. Swiggy has also allocated Rs 11,153 million for enhancing the brand's visibility and outreach.

Negative cash flows from operations

The company has only incurred net losses since its inception in 2014. However, the company's annual losses as a percentage of its revenue from operations has come down in the recent years. From 63.61% in 2022 to 20.90% in 2024, the losses as part of its revenue from operations further narrowed to 18.96% for the quarter ended June 30, 2024.

Moreover, Scootsy is yet to receive requisite registrations and approvals for each of the dark store it intends to set up. It does not help that Scootsy has not run into greens over the past 2-3 years. The subsidiary had incurred losses worth Rs 2,953.5 million, which have burgeoned to Rs 4,239.72 million in FY24.

Swiggy also lags behind its rival Zomato in terms of monthly transacting users (MTU), along with many other key financial and operational metrics. Zomato has a wider, pan-India presence, commanding a 57% market share in FY24. Compared to this, Swiggy's market share stood at 43% during the same period. As of FY24, Swiggy's MTUs, at 12.7 million, are about 31% lower than Zomato's MTU of 18.4 million.

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