Swiggy- Your IPO is on the way

Thursday, Jul 18, 2024

Swiggy, the prominent Indian food delivery giant, is gearing up for its much-anticipated Initial Public Offering (IPO) in 2024. The company, backed by SoftBank, resumed its IPO plans after a temporary pause due to market conditions. Swiggy has now targeted a listing between July and September 2024, as global and Indian markets have shown signs of recovery. In preparation for the IPO, Swiggy has invited eight investment banks, including Morgan Stanley, JP Morgan, and Bank of America, to assist in the process.

  1. Valuation Increase:
    • Swiggy's valuation has risen by 13% to $12.1 billion as per Invesco, up from $10.7 billion in its last funding round in 2022. This increase reflects investor confidence in Swiggy's market position and future growth potential​. Some investors like Baron Capital have valued the company at $15.1 billion as on 31st March 2024.
  2. Fundraising Approval:
    • In April 2024, Swiggy's shareholders approved a $1.25 billion fundraising initiative through the IPO. This includes a fresh issue of equity shares worth ₹3,750 crore and an offer for sale (OFS) by existing shareholders worth up to ₹6,664 crore. The fundraising also features a green shoe option to meet additional demand if necessary​.
  3. Financial Performance:
    • Swiggy reported revenue from operations of ₹8,264.6 crore for the fiscal year 2022-23, a substantial increase from ₹5,704.9 crore in the previous year. However, its net loss also surged to ₹4,179 crore in 2022-23, up from ₹3,627 crore in 2021-22. This financial trajectory indicates significant growth but also highlights the ongoing challenges in achieving profitability​.
  4. Organizational Changes:
    • In preparation for the IPO, Swiggy has made several key appointments. Founder Sriharsha Majety was appointed as the executive director, designated as Managing Director and Group CEO, with effect from April 1, 2024. Additionally, Lakshmi Nandan Reddy Obul was appointed as the executive director and head of innovation​.
  5. Strategic Shifts and Layoffs:
    • To streamline operations and move towards profitability, Swiggy reduced its workforce by 6% in January 2024. This downsizing is part of a broader strategy to stabilize its food delivery business while managing the costs associated with its expanding grocery service, Instamart​.
  6. Market Position:
    • Swiggy holds a 45% market share in the Indian food delivery sector, positioning it well to benefit from the structural growth in online food delivery in India. This robust market presence is a key factor in its increased valuation and investor interest​.

These developments highlight Swiggy's proactive measures to optimize its financial health and strengthen its market position ahead of the IPO, making it a significant player to watch in the upcoming months.

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