As Swiggy, the food and grocery delivery giant, prepares for one of the most anticipated IPOs of recent times, its Updated Draft Red Herring Prospectus (UDRHP) offers valuable information on the ₹10,000-crore public issue. Here are the key details.
About the Swiggy IPO
The Swiggy IPO will feature a combination of fresh shares and an Offer for Sale (OFS). The fresh issue is valued at ₹3,750 crore, while the OFS will consist of up to 1.85 crore shares. An Extraordinary General Meeting (EGM) has been called to increase this to ₹5,000 crore, approximately $600 million.
Swiggy’s Evolution and Business Model
The company was founded in 2014 as a food delivery service; Swiggy has since expanded into multiple services, including quick Commerce (2020), Dineout (2022), and Genie, a pick-up/drop-off service launched in 2020. The company also operates in hyperlocal commerce through Swiggy Minis.
Ownership and Stakeholders
Swiggy does not have an identifiable promoter according to SEBI regulations. The CEO and Founder, Sriharsha Majety, holds a 6.23% stake, while co-founder Lakshmi Nandan Reddy Obul owns 1.62%. As of the UDRHP filing date, the company had 5,232 equity shareholders and 1,187 holders of Compulsorily Convertible Preference Shares (CCPS).
Selling Shareholders
The selling shareholders listed in the updated DRHP include corporate entities like Accel India IV (Mauritius), Alpha Wave Ventures, LP, Coatue PE Asia XI LLC, Elevation Capital V, and Tencent Cloud Europe B.V. Individual shareholders include Swiggy’s co-founders and early investors like Sriharsha Majety and Lakshmi Nandan Reddy Obul.
Objectives of the Offer
The UDRHP outlines five key objectives for the upcoming IPO proceeds:
- ₹137.41 crore will be allocated to Swiggy’s material subsidiary, Scootsy, for repaying borrowings.
- ₹982.40 crore will be used to expand the Dark Store network for the Quick Commerce segment.
- ₹586.20 crore is earmarked for technology and cloud infrastructure improvements.
- ₹929.50 crore will go towards brand marketing and business promotion. These investments are planned to be deployed over four fiscal years, from FY2025 to FY2028.
Swiggy’s Financial Performance
Swiggy has reported net losses since its inception. For the financial year ending March 31, the company recorded losses of ₹2,350.24 crore, a significant reduction from ₹4,179.30 crore in FY23 and ₹3,628.89 crore in FY22. Revenue from operations grew to ₹11,247.39 crore, up from ₹8,264.59 crore in FY23 and ₹5,704.89 crore in FY22.
Swiggy vs. Zomato: Key Metrics
For FY24, Swiggy’s revenue was ₹11,247.39 crore, slightly lower than Zomato’s ₹12,114 crore. Swiggy’s earnings per share (EPS) on a diluted basis was (₹10.70), while Zomato reported ₹0.41. However, Swiggy’s NAV per share stands at ₹35.48, compared to ₹23.14 for Zomato.
Risks to the Business
- The inabilityto generate adequate revenue growth and manage expenses could result in continued losses.
- Challenges in retaining or acquiring users cost-effectively could impact financial stability.
- Attracting and retaining delivery partners is critical to maintaining operations.
- Increased operating costs passed on to customers could lead to a decline in order volumes.
- Effective management of Dark Stores is vital for the success of the Quick Commerce business.
Wrapping up
With these details in mind, Swiggy’s upcoming IPO promises to be a significant event in the market, drawing attention from investors keen to see how the company plans to balance growth with profitability. So, all the best for your venture!
