Photo: Reuters
Shares of SoftBank-backed Swiggy surged nearly 15% during their trading debut in India on Wednesday, reflecting a growing investor confidence in food and grocery delivery firms as more shoppers turn to online platforms for quick deliveries. Swiggy's shares outperformed the broader Indian market and exceeded some analysts' expectations for the loss-making firm following its $1.4 billion IPO—the country's second-largest this year. The stock opened at 420 rupees ($4.98) on India's National Stock Exchange and climbed to a high of 448 rupees, valuing the company at nearly $12 billion.
Swiggy and its main competitor, Zomato, are capitalizing on the surge of new online shoppers in India by offering 'quick commerce' grocery deliveries within 10 minutes, expanding beyond their core food delivery services. This rapid growth in quick commerce has negatively impacted supermarket revenues and compelled major players, including Mukesh Ambani—Asia's wealthiest man—to introduce faster delivery services from his retail outlets in India. Swiggy's quick commerce service, Instamart, has experienced 'explosive growth,' according to Anand Kripalu, a board member, who spoke at the listing ceremony in Mumbai.
Dutch tech investor Prosus, which holds a 25% stake in Swiggy, announced on Wednesday that it had made $2 billion from its investment. SoftBank holds approximately an 8% stake. The listing occurs as both Swiggy and Zomato face antitrust scrutiny over potential violations of competition laws in the food delivery sector and demands from retail groups to investigate their quick commerce businesses for alleged predatory pricing.
The Swiggy IPO was oversubscribed by more than three times last week, aided by institutional investors placing orders on the final day of the sale. Despite this, Swiggy's debut pales in comparison to Zomato's blockbuster listing in 2021, where shares have more than tripled since. Although Swiggy has reduced its annual losses, it has yet to achieve profitability, unlike Zomato, which posted a profit in fiscal 2024 after a loss the previous year.
"The company's ongoing losses and challenging market conditions may dampen investor enthusiasm in the long term," cautioned Shivani Nyati, head of wealth at Swastika Investmart. Macquarie Capital forecasts Swiggy's food order values in 2024-25 to reach $3.3 billion, approximately 25% lower than Zomato's. In the quick commerce sector, annual nationwide sales are projected to surpass $6 billion this year, with Zomato's Blinkit holding nearly a 40% market share, while Swiggy has around 30%, according to research firm Datum Intelligence.
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