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Swiggy, the Indian food delivery giant, experienced a successful debut on the Mumbai stock exchange, signaling a vote of confidence in large initial public offerings (IPOs) within the country. The company's shares surged 7% above the selling price of 390 rupees, reaching 416.20 rupees, and further climbed to 444.65 rupees at 11:47 a.m. local time. This impressive performance valued Swiggy at just under $12 billion, signifying a strong start for the company in the public markets.
The $1.3 billion IPO, the second-largest in India this year after Hyundai Motor India's record $3.3 billion offering, was met with subdued initial demand. However, robust institutional interest on the final day propelled the IPO to a strong close. This success comes amidst global funds pulling back from local shares due to concerns surrounding earnings growth. Swiggy's IPO was seen as a crucial test of investor sentiment towards India's rapidly expanding quick-commerce sector, a market that is projected to reach $78 billion in combined gross orders within a decade. The company now competes with larger listed rival Zomato and privately-held Zepto in this competitive space.
While the IPO success defies the recent trend of weak performance among large first-time offerings in India, Swiggy faces numerous challenges. Competition amongst quick commerce firms has caught the attention of India's antitrust watchdog, which is currently investigating both Swiggy and Zomato for potential unfair practices. Both companies have stated that no final order has been issued. Fierce competition also translates to increased spending on small-sized warehouses, and regulatory actions such as welfare schemes for gig workers could lead to inflationary pressures. Despite these hurdles, Swiggy's growth is underpinned by strong online demand in one of the world's fastest-growing major economies. The company holds a market share of approximately 37%, slightly behind Zomato's 39% as of March 31, according to Chryseum Advisors. The company's valuation, however, is discounted compared to Zomato, with analysts citing strong growth potential for the quick commerce sector, which represents a significant portion of the broader retail market.
While Swiggy's initial public offering has been successful, the company faces challenges in a competitive market with regulatory scrutiny. The company's performance in the long term will depend on its ability to navigate these obstacles and capitalize on the growth potential of the quick commerce sector in India. The IPO provides an opportunity for Swiggy to expand its operations and invest further in its platform, but its success will be determined by its ability to maintain market share and navigate the complexities of the Indian business landscape.
Source: Swiggy Share Price & IPO Listing Updates: Swiggy shares decline 5% after hitting fresh high