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The highly anticipated initial public offering (IPO) of Swiggy, India's leading food delivery platform, is expected to have a muted debut on November 13, as indicated by the latest trends in the grey market. The grey market premium (GMP), which reflects the expected gains on the listing day, has seen a consistent decline, signaling a subdued investor sentiment towards the company.
The grey market premium for Swiggy shares has plummeted from Rs 18 on November 1, translating to a potential listing gain of 4.62 percent, to a mere Re 1-2 currently, according to market trackers IPO Watch and Investor Gain. This indicates a marginal listing gain of only 0.2-0.5 percent, a stark contrast to the earlier optimistic projections.
Several factors are contributing to this decline in investor enthusiasm. The broader market is facing challenges with concerns over urban demand slowdown and foreign investor outflows impacting sentiment. Additionally, Swiggy's path to profitability remains a point of apprehension for investors. Despite receiving full subscription on the final day of bidding, the IPO garnered a tepid response in the first two days, highlighting some initial hesitation.
The IPO, valued at Rs 11,327.43 crore, places Swiggy's valuation at approximately Rs 95,000 crore at the top price band. While this is substantial, it pales in comparison to its competitor Zomato, which went public in July 2021 and currently has a market valuation of Rs 2.25 lakh crore.
Swiggy holds the second-largest position in India's food and grocery delivery market after Zomato. In food delivery, Swiggy controls 34 percent of the market compared to Zomato's 58 percent. In quick commerce, Zomato's Blinkit commands around 40-45 percent of the market, while Swiggy's Instamart holds an estimated 20-25 percent, according to brokerage reports.
The muted IPO debut, however, does not necessarily signify a lack of potential for Swiggy. The company operates in a rapidly growing sector with significant long-term prospects. However, the current market conditions and concerns regarding profitability are expected to dampen the initial excitement surrounding the IPO.
Source: Swiggy shares likely to make muted listing debut as GMP falls below 1%