Swiggy’s upcoming IPO represents a major event in the foodtech and quick commerce industries, setting the stage for one of the largest IPOs in India’s history. The ₹10,000 Cr IPO, which includes a ₹3,750 Cr fresh issuance and a substantial ₹6,485 Cr offer-for-sale (OFS) component, demonstrates confidence from institutional investors while providing early backers like Accel, Tencent, and Alpha Wave the opportunity to partially exit.
Swiggy’s financials reflect a company in transition, with revenue growing by 36% YoY to ₹11,247.4 Cr in FY24. The company’s efforts to reduce losses are paying off, as net loss has almost halved to ₹2,256 Cr. A strong focus on both the core food delivery business and the fast-growing Instamart quick commerce segment indicates Swiggy’s strategic intention to diversify its revenue streams and leverage its established user base of 112.7 million.
Instamart, Swiggy’s quick commerce segment, continues to expand rapidly, recording a GOV of ₹2,724 Cr in Q1FY25. With a 12.5-minute average delivery time and over 605 active dark stores, Instamart is positioned as a strong competitor to Blinkit, Zomato’s quick commerce subsidiary. This emphasis on quick commerce could prove crucial, as consumers increasingly demand faster and more convenient services.
Key Data:
| Parameter | Details |
|---|---|
| IPO Size | ₹10,000 Cr (₹3,750 Cr Fresh Issue + ₹6,485 Cr OFS) |
| Fresh Issue Size | ₹3,750 Cr (with potential to upsize by ₹5,000 Cr) |
| Offer for Sale (OFS) Component | 18.53 Cr shares (valued at approx. ₹6,485 Cr) |
| Major Investors Offloading Shares | Accel, Coatue, Alpha Wave, Elevation, Norwest, Tencent |
| Notable OFS Breakdown | Accel: 1.05 Cr shares, Alpha Wave: 55.73 Lakh shares |
| Users (as of June 2024) | 112.7 Million Transacted Users |
| Q1FY25 Gross Order Value (GOV) | ₹10,189.58 Cr |
| FY24 Gross Operating Revenue | ₹11,247.4 Cr (up 36% YoY) |
| FY24 Net Loss | ₹2,256 Cr (down 46% from FY23) |
| Instamart GOV (Q1FY25) | ₹2,724 Cr |
| Dark Stores (Instamart) | 605 across 43 cities (as of Sept 10, 2024) |
| Average Delivery Time (Instamart) | 12.5 minutes (as of June 2024) |
IPO Prospectus:
Swiggy has filed its Draft Red Herring Prospectus (DRHP) with SEBI to raise ₹10,000 Cr via an initial public offering. The IPO will include a fresh issuance of ₹3,750 Cr, with a potential upsize of ₹5,000 Cr, making the total fresh issue component up to ₹11,600 Cr. Additionally, there will be an offer-for-sale (OFS) of 18.53 Cr shares by existing investors such as Accel, Tencent, and Alpha Wave Ventures.
The funds raised from the IPO will be used for strategic investments and expansions, including:
- Investment in subsidiary Scootsy
- Expansion of dark store network (for quick commerce segment Instamart)
- Investments in technology and cloud infrastructure
- Inorganic growth initiatives
Swiggy is also looking to bolster its footprint in quick commerce, with over 605 dark stores operating in 43 cities as of September 2024.
Comparison with Competitors:
| Company | Swiggy | Zomato | Blinkit (Acquired by Zomato) |
|---|---|---|---|
| IPO Size | ₹10,000 Cr | ₹9,375 Cr (2021) | N/A (Acquired by Zomato for ₹4,447 Cr) |
| Revenue (FY24) | ₹11,247.4 Cr | ₹7,078 Cr (FY23) | Integrated into Zomato |
| Net Loss (FY24) | ₹2,256 Cr | ₹971 Cr (FY23) | N/A (Integrated) |
| Instamart (Q1FY25) | ₹2,724 Cr (Annualised GOV: $1.3 billion) | Competes via Blinkit | ₹2,000 Cr GoV (2023 estimates) |
| Delivery Time | 12.5 minutes (Instamart, June 2024) | 13 minutes (Blinkit) | 13 minutes |
| Geographic Reach | 681 cities (Food Delivery), 32 cities (Instamart) | 1,000+ cities (including Blinkit) | 400+ cities (before Zomato acquisition) |
Swiggy’s major rival, Zomato, went public in 2021 with a slightly smaller IPO of ₹9,375 Cr. While Zomato has struggled with profitability (posting a ₹971 Cr loss in FY23), it has grown its operations significantly, including acquiring Blinkit to tap into the quick commerce market. This acquisition makes Zomato a direct competitor to Swiggy in the fast delivery space. However, Swiggy’s first-mover advantage with Instamart, a larger dark store network, and faster average delivery times gives it a competitive edge.
Zomato and Blinkit, with their presence in over 1,000 cities combined, surpass Swiggy’s 681-city food delivery footprint and 32-city Instamart reach. However, Swiggy’s higher revenue and aggressive expansion of its dark store network could close this gap over time.
In terms of quick commerce, Swiggy’s Instamart appears to be on a rapid growth trajectory, accounting for an annualized GOV of $1.3 billion in Q1FY25, which is approximately 40% of the company’s total GOV. With more consumers shifting to online grocery shopping, this could become a key differentiator for Swiggy.
Conclusion:
Swiggy’s IPO comes at a pivotal moment for the company as it looks to consolidate its position in both food delivery and quick commerce. While profitability remains a challenge, the company’s improved financials, expanded offerings, and ambitious growth plans reflect strong potential. The IPO proceeds will be critical for funding these growth strategies and improving operational efficiency. With heavy-hitting investors like Accel and Tencent opting to reduce their stakes, this IPO is a defining moment for both Swiggy and its investors.
Given Swiggy’s aggressive expansion into quick commerce and the fast-growing nature of this segment, could Swiggy’s Instamart become a bigger revenue driver than its traditional food delivery business in the next few years? How would that shift the dynamics of competition with Zomato and Blinkit?
