Swiggy IPO opens with strong brokerage support for long-term gains

Swiggy Limited launched its highly anticipated initial public offering (IPO) on 6th November 2024, marking its debut in the Indian primary market. The IPO will be open for bidding until 8th November, with a price band set between Rs 371 and Rs 390 per share. Through this offer, the popular food delivery platform aims to raise Rs 11,327.43 crore, comprising fresh issue shares and an offer for sale.

At a price band set between Rs 371-390, the IPO allows investors to apply with a minimum lot size of 38 shares, costing around Rs 14,820. Notably, Swiggy has already raised Rs 5,085.02 crore from anchor investors. The three-day public subscription window will close on November 8, 2024, with shares expected to debut on the BSE and NSE by November 13, 2024.

Strong fundamentals and growth strategy drive “Subscribe” ratings 

Deven Choksey Research has recommended subscribing, emphasizing Swiggy’s focus on the fast-growing hyperlocal commerce and Quick Commerce markets. Analysts point out Swiggy’s increased Average Order Value (AOV) and expanded Dark Store network, which grew from 301 in FY22 to 523 in FY24. The unified app model, which includes food delivery, groceries, and household items, enables Swiggy to streamline operations and improve customer acquisition, setting it apart from competitors. 

Swastika Investmart also advised subscribing for the long term, albeit with a note of caution for risk-averse investors. Shivani Nyati, Head of Wealth at Swastika, highlighted that Swiggy’s negative P/E ratio and loss-making status might concern conservative investors. However, Swiggy's pricing, valued at around 7.8x market cap-to-sales, appears reasonable against Zomato’s valuation, presenting an appealing opportunity for investors aiming to leverage growth in India’s dynamic hyperlocal market.

With steady expansion across India, Swiggy is well-positioned to capitalize on its diverse services, making it a promising prospect in the evolving commerce landscape.