Should Investors Take A Bite Of Swiggy IPO? Here's What Brokerages Suggest

As the much-anticipated Swiggy IPO opens for subscription on November 6, brokerages are weighing in on whether investors should take a bite of this offering.

The IPO of the food delivery and hyperlocal logistics giant has drawn a range of opinions from analysts, with varying perspectives on the company's growth potential and risks.

Aditya Birla Money has expressed a cautious stance, recommending an 'Avoid' for the Swiggy IPO. In its note, the firm pointed to Swiggy’s negative cash flows and ongoing losses, which remain a significant concern for the company’s long-term profitability.

Despite the company's strong revenue from its food delivery business and its ambitious super app strategy, Aditya Birla highlights key risks such as intense competition, high cash burn in its quick commerce business Instamart, and a slashed valuation ahead of the IPO, which now stands at $11.3 billion, down from the earlier $15 billion.

The firm also noted concerns about the sustainability of Swiggy’s quick commerce segment due to the potential regulatory challenges from the Competition Commission of India (CCI). Overall, Aditya Birla is skeptical about Swiggy's current valuation, recommending an 'Avoid' for potential investors.

In contrast, Deven Choksey Research has a more optimistic view on the Swiggy IPO, giving it a 'Subscribe 'rating. Choksey's analysts highlight Swiggy’s dominant market position in India’s growing food delivery and hyperlocal logistics sectors.

The brokerage emphasises the company's broad service offerings, which include food delivery, grocery delivery, and event bookings. Choksey also notes that Swiggy has built a robust technological ecosystem, helping it scale rapidly across cities.

Despite challenges like negative Ebitda and competitive pressure from other players like Zomato and Zepto, Choksey believes Swiggy’s strong brand and significant market penetration make it a promising long-term investment.

The firm suggests the IPO offers good upside potential at the current price band of Rs 371-390, noting that Swiggy is well-positioned to capitalise on the growing online food delivery and quick commerce markets in India.

Swiggy, founded in 2013 as Bundl Technologies, has evolved into a diversified platform offering food delivery, quick commerce, and out-of-home consumption services.

The IPO will offer a mix of fresh issuance and an offer for sale, with the price band set at Rs 371-390 per share. The issue is expected to raise between Rs 11,327 crore and Rs 11,518 crore at the higher end of the price band. The proceeds will be used for investments in technology and infrastructure, dark store expansion, and debt repayment.

The IPO opens on November 6 and will close on November 8, with the listing expected on November 13.