Swiggy IPO: Is $10 Billion Valuation Cheap Or Expensive?
The IPO will include a fresh issue of Rs 3,750 crore, with up to Rs 6,950 crore offered for sale by existing investors, based on the recent highest share price of Rs 375.
Swiggy Ltd, a major player in food delivery and quick commerce, has submitted an updated draft red herring prospectus to the market regulator Securities and Exchange Board of India for review and public comment. The company seeks a valuation of approximately Rs 83,365 crore, or nearly $10 billion.
Previously known as Bundl Technologies, Swiggy changed its name to better align with its brand and is aiming to raise around Rs 10,700 crore, based on the most recent share transaction prior to filing the draft prospectus.
Following the conversion of all preference shares issued to investors before the draft filings, Swiggy will have a total equity of 222.30 crore shares, each with a face value of Re 1. Days before the filing, investors transferred shares at prices ranging from Rs 330 to Rs 375 per share, valuing the company between Rs 73,811 crore and Rs 83,365 crore. The initial public offering size will be between Rs 9,864 crore and Rs 10,700 crore.
The IPO will include a fresh issue of Rs 3,750 crore, with up to Rs 6,950 crore offered for sale by existing investors, based on the recent highest share price of Rs 375. In April, the company had made a confidential filing with the market regulator under a new process that allows companies seeking public listing to disclose their financials and key performance indicators confidentially.
These observations and disclosures are then submitted as part of the draft red herring prospectus to SEBI for final approval.
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To be sure, while recent transactions suggest a valuation of close to $10 billion, the IPO pricing may be lower than the transfer price. Swiggy is currently loss-making, and qualified institutional buyers, including mutual funds, will play a significant role in determining the pricing, which may result in a discounted IPO price as the company begins its roadshows with investors.
Zomato, Swiggy's competitor, has a market capitalisation of Rs 2.50 lakh crore. Zomato had reported Rs 12,114 crore in revenue from operations and a profit of Rs 351 crore during the financial year-ended March 2024. In comparison, Swiggy recorded a revenue of Rs 11,247 crore and a loss of Rs 2,256 crore for the same period.
Swiggy is valued at little over seven-times price to sales in comparison to 20-times price to sales for its peer Zomato.
