🍲 Swiggy’s IPO Plans
Swiggy, one of India's largest food delivery platforms, is targeting an IPO next month with a valuation goal of $11.3B. This comes as a significant markdown compared to its chief competitor, Zomato, which holds a market cap of $26.2B. Swiggy has set a share price band of ₹371 to ₹390 ($4.41 to $4.64), aimed at raising a total of $1.34B. Of this, $535M will come from fresh share issuances, while the remainder is set to be derived from existing investors cashing out.
📉 Falling Short of Rival Zomato
Swiggy’s IPO valuation is notably lower than Zomato’s, marking a 57% discount. This positioning follows Swiggy’s decreased market share in both food delivery and quick commerce, with Swiggy now ranked third in the latter, trailing Zomato’s Blinkit and Zepto. This performance has affected Swiggy’s valuation growth since its last private valuation of $10.7B in 2022 by Invesco and Baron. Meanwhile, Zomato plans to boost its own funds by up to $1B through a qualified institutional placement, strengthening its lead further.
💰 Investor Exit and Market Concerns
Swiggy’s IPO represents a moment for some investors to exit, as the company has seen steady but slower growth. The valuation does include a slight premium from its 2022 private market level, but with Zomato’s significantly larger valuation, some analysts question Swiggy’s long-term viability. Quick commerce, where Swiggy pioneered the segment, has now seen it pushed back by Zomato and others.
🌐 Future Market Position
Swiggy’s IPO aims to stabilize its market position and bring in essential funding to fuel growth, especially as it faces intensified competition. Though the company once led in food delivery, its market position has shifted. If the IPO succeeds, Swiggy could gain the capital needed to reestablish its place among India’s top delivery services. However, as Zomato’s strong market cap demonstrates, Swiggy’s valuation reflects a challenging road ahead.
Can Swiggy’s IPO narrow the gap with Zomato’s valuation?
