Swiggy IPO Receives Tepid Response as Grey Market Premium Drops to Near Zero

As Swiggy Ltd’s IPO closed on the final day of bidding, the grey market premium (GMP) fell to almost zero from an earlier range of Rs 2-3. The IPO has seen lukewarm interest overall, with only the institutional and retail investor portions fully subscribed. The Non-Institutional Investor (NII) category, however, remains undersubscribed. Analysts view Swiggy’s IPO as a prospect for investors with confidence in the company’s long-term transformation potential, while acknowledging the present constraints on growth and profitability.

Swiggy’s IPO, which launched on November 6 and concludes today, November 8, has been priced at a band of ₹371 to ₹390 per share. The company seeks to raise ₹11,327 crore, which includes a fresh issue of shares worth ₹4,499 crore and an offer for sale (OFS) totaling ₹6,828 crore. The Bengaluru-based food and grocery delivery platform attracted significant interest from institutional investors, collecting ₹5,085.02 crore through an anchor book on November 5.

Operating in an oligopolistic and still-evolving market, Swiggy has ample opportunity to carve out its niche. Its innovative approach, such as the new 10-minute food delivery offering, could further strengthen its position. However, Swiggy is still operating at a loss on an aggregate basis, and profitability might remain a longer-term goal. Analysts recommend this IPO mainly for high-risk investors willing to invest with a long-term perspective. At the upper end of the price band (₹390), the IPO is priced at 7.8x FY24 Market Cap to Sales, which is comparatively reasonable next to Zomato, currently trading at 17.5x.

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