The quick commerce market is booming, and more people are ordering food online now than ever before. Want to grab a bite? One of the largest players in this food delivery and Q-commerce space, Swiggy, is going public with a mega Rs 11,300 crore initial public offering.
The Bengaluru-based company has set a price band of Rs 371 to Rs 390 a share for the public issue that opens for subscription on November 6 and closes on November 8.
Notably, buoyed by the strong growth in the Q-commerce market, Swiggy has tweaked its offer; not only has the fresh fundraising been increased, but the offer-for-sale portfolio by existing investors has been reduced slightly.
The fresh issue will now be worth Rs 4,499 crore, up from Rs 3,750 crore. Separately, the offer for sale portion is for up to 17.5 crore shares now, lowered from 18.5 crore shares earlier, with Swiggy's largest investor, Prosus, reducing its divestment size.
The offer will include a reservation of 7.50 lakh equity shares for subscription by eligible employees, not exceeding 5 per cent of its post-offer paid-up equity share capital.
Swiggy plans to use the IPO proceeds to invest in its arm Scootsy to expand its dark store network for its growing Q-commerce business, repayment and pre-payment of certain borrowings of Scootsy, investment in technology and cloud infrastructure and brand marketing.
Apart from opening new dark stores, Swiggy has also been opening larger stores, a move that has helped it offer more products and also reduce average delivery times.
The focus on scaling up the Q-commerce business is not surprising, considering it is growing faster than the food delivery business and has already reached 40 per cent of its food delivery business. The company will also look for acquisitions through fundraising.
Currently, Zomato is the only other food aggregator that is listed on the stock markets. Zomato's Q-commerce arm Blinkit directly competes with Swiggy Instamart.
Zomato shares ended down 1.7 per cent at Rs 248 on the BSE on Wednesday. The stock is down more than 15 per cent since it touched a 52-week high of Rs 298.20 on September 24.
Swiggy v Zomato: How do the two rivals compare?
In the quarter ended June 2024, Swiggy saw total orders of 155.98 million in its food delivery business, while Gross Order Value (GOV) in food delivery was around Rs 6,808 crore.
In the Q-commerce business, total orders in the June quarter stood at 55.90 million, while GOV was at Rs 2,724 crore. Separately, in their out-of-home consumption business, total transactions in the quarter stood at 2.03 million, while GOV was at Rs 657 crore.
As per numbers reported for the July-September quarter, rival Zonato saw a GOV of Rs 9,690 crore in its food delivery business. Its GOV in Q-commerce and going out verticals was at Rs 6,132 crore and Rs 1,849 crore, respectively.
Overall, Zomato's adjusted revenue in the September quarter was up 58 per cent from a year ago to Rs 5,127 crore, while adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) stood at Rs 330 crore, up from Rs 41 crore in the year-ago quarter.
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In contrast, Swiggy Platform's consolidated gross revenue in the June quarter was at Rs 3,477 crore, up 29 per cent from a year ago. Its consolidated adjusted EBITDA loss stood at Rs 347 crore, lower than the Rs 487 crore year ago EBITDA loss.
In recent weeks, several fast-moving consumer goods companies have highlighted slowing demand in urban markets. Swiggy officials say there have been no such slowdown signs just yet. "At this point, we are not seeing that. Our businesses have been demonstrating strong growth," said Shriharsha Majety, the company's CEO.
Swiggy continues to add consumers, categories, and geographies to the platform, which ultimately continues to aid our growth, officials added.
