Swiggy’s Road to IPO: Revenue, Risks, and Everything
- Share.Market
- 3 min read
- 06 Nov 2024
Swiggy—India’s second-largest player in food delivery and quick commerce—is set to launch its much-anticipated IPO! From top celebrities to cricket, Bollywood, and tennis stars, many have shown interest in Swiggy and have already acquired shares in the unlisted market.
About Swiggy
Founded in 2014 by Sriharsha Majety, Nandan Reddy, and Rahul Jaimini, Swiggy was one of India’s earliest hyperlocal commerce platforms. Today, Swiggy offers services across food delivery, quick commerce, out-of-home consumption, supply chain, and distribution.
Swiggy differentiates itself from Zomato by consolidating its services on a single app, reducing costs.
Swiggy IPO Objectives & Details
The company plans to use the net proceeds to invest in its subsidiary Scootsy, upgrade technology and cloud infrastructure, enhance brand visibility through marketing and promotions, and pursue potential acquisitions. Additional funds will be used for general corporate purposes.
Swiggy IPO Proceeds will be allocated as follows:
- Debt Repayment: ₹137.4 crore (for Scootsy subsidiary)
- New Dark Stores: ₹559.1 crore, with lease/license payments of ₹423.3 crore
- Technology & Cloud Infrastructure: ₹586.2 crore
- Marketing & Promotion: ₹929.5 crore
The remaining funds will support inorganic growth and general corporate purposes.
IPO Date | 6th – 8th November, 2024 |
Listing Date | 13th November, 2024 |
Face Value | ₹1 |
Price Band | ₹371 to ₹390 per share |
Lot Size | 38 |
Total Issue Size | ₹11,327.43 Cr |
Fresh Issue | ₹4499 Cr |
Offer for Sale | ₹6828.43 Cr |
The IPO allotment is expected on November 11. Successful bidders will see their shares credited to their demat accounts on November 12, and unsuccessful bidders will receive refunds on the same day.
Revenue Breakdown
They rely heavily on food delivery as their primary revenue stream, but Swiggy’s second-largest segment is supply chain and distribution.
Segment | FY24 |
Food Delivery | 45.88% |
Supply Chain & Distribution | 42.50% |
Quick Commerce | 8.70% |
Out-of-home Consumption | 1.40% |
Platform Innovations | 1.53% |
Swiggy’s Expansion Opportunities Beyond Metro Cities in Online Food Delivery
Swiggy’s growth potential lies mainly in two sectors: online food delivery and quick commerce. Let’s look at the market projections!
Online Food Delivery Market India’s online food delivery market is projected to reach ₹1,400-1,700 billion (US$17-21 billion) by 2028, growing at a CAGR of 17-22%. Currently, the top 60 cities (Metro and Tier 1) account for 75-80% of the total market, indicating significant untapped potential in other regions. As online food delivery gains traction, this growth is expected to accelerate.
Indian Retail Market & Quick Commerce India’s retail market is 60% grocery-based, with local kirana stores, organized retail players (such as DMart, Reliance Retail), e-commerce, and quick commerce players participating. Quick commerce’s share in online retail has increased from 0.14% in 2018 to 4.8% in 2023 and is expected to be the fastest-growing segment through 2028, with an annual growth rate of 60-80%.
Financials of Food Delivery Business
Quick Commerce | FY24 | FY23 | FY22 |
Revenues (₹cr) | ₹978.6 | ₹451.4 | ₹82.8 |
Gross Order Value (₹cr) | ₹8,068.50 | ₹5,118.4 | ₹1643.43 |
Active Dark Stores | 523 | 421 | 301 |
Contribution Margin | -6.01% | -23.55% | -32.26% |
Monthly Transacting Users (m) | 4.24 | 3.20 | 1.10 |
Swiggy has 12.7 million monthly active users in food delivery compared to Zomato’s 19 million. Swiggy has achieved adjusted EBITDA positivity and improved margins in food delivery, though it still lags behind Zomato.
Key Strength of Swiggy
Swiggy’s strengths include its strong brand recognition as a leading food delivery platform, an extensive network of restaurant partnerships, and advanced technology infrastructure that enables efficient operations. Its successful expansion into quick commerce through Instamart further enhances its position in the market.
Risks of Swiggy
Swiggy has been running at a loss with negative cash flow from the start. If revenue growth and expenses are not effectively managed, losses could widen further. Additionally, competition in the hyperlocal market is heating up with new entrants like Flipkart Minutes. Commerce Minister Piyush Goyal has raised concerns about quick commerce platforms’ rapid expansion, which could lead to regulatory constraints affecting growth.