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Shares of India's biggest food-and-grocery delivery firm, Swiggy, increased nearly 15% in its trading debut on November 13, 2024. This Swiggy share surge is following its initial public offering (IPO) of US$1.4 billion, despite weak market-wide trends.
Swiggy's shares were listed at ₹420 (US$4.98) on the National Share Exchange and increased to ₹448 by mid-morning. This is a huge leap from its issue price of ₹390. This positive momentum came even as the country's benchmark indexes dipped. The dip can be attributed to the worse-than-expected inflation number and decreasing expectations of interest-rate cuts.
The IPO of Swiggy was the second-largest share offering in India so far this year. The company's valuation peaked at US$11.9 billion while observing an oversubscription. Swiggy’s IPO was oversubscribed by more than three times with robust demand from institutional investors. Thus, marking yet another significant milestone.
Analysts and market experts are cautiously optimistic about the enormous growth potential of Swiggy. The company has strong brand recognition, an enormous delivery network, and dominance in the market.
Listing "showed a kind of optimism in the long-term growth prospects of Swiggy," said Shivani Nyati, head of wealth at Swastika Investment. However, continued losses of the company and broader challenges in the market might dampen investor enthusiasm in the long run, Nyati further noted.
After reporting narrower annual losses, Swiggy has not yet turned profitable, something for which analysts at Macquarie Capital have cautioned. Macquarie has initiated coverage on Swiggy, giving it an "underperform" rating, as the young company has a long and winding road to still cover to profitability. Macquarie analysts have set the target price of ₹325 per share, nearly 17% lower than what Swiggy has raised through its IPO.
Swiggy's IPO debut contrasted sharply with that of its prime competitor, Zomato, who had a blockbuster listing in 2021. Zomato’s shares are up three times since the debut.
The two companies together take a dominant place in India's food delivery market with market shares estimated to be 34% and 58%, respectively. However, Swiggy still hasn't turned a profit contrary to Zomato, which unveiled a fiscal 2024 profit after suffering a loss in the previous year.
Investors will be tracking the firm further on its performance in terms of beating the market expectations in the highly competitive food delivery market.
