Swiggy’s public market debut on November 13 has added a fresh milestone to SoftBank’s portfolio of Indian investments, with shares opening at ₹420 and reaching ₹449, well above market expectations. This IPO comes in the wake of Ola Electric’s secondary market debut in August, another SoftBank-backed venture that has garnered significant attention. Here’s a look at what this strong start could mean for Swiggy, SoftBank’s strategy in India, and the future of their big bets on consumer tech and electric vehicles.
Credits: CNBCTV 18
Swiggy’s IPO Exceeds Expectations
The rise in food delivery across India made Swiggy’s IPO one of the most anticipated in the consumer IT sector. In contrast to some analysts’ forecasts of a flat start, Swiggy surprised the market with a 7% surge in its share price on the first day. Given the company’s recent cost-cutting measures and robust revenue growth, Swiggy’s rise aligns with investors’ increasing appreciation of the potential of the Indian meal delivery industry. Swiggy’s profitability still trails that of its closest competitor, Zomato, despite a 36% increase in revenue to ₹11,247 crore in FY24 and a 44% reduction in losses.
Ola Electric: SoftBank’s Star in the EV Market
Ola Electric is generating headlines in India’s electric vehicle (EV) market, while Swiggy is making waves in the food delivery industry. One of the year’s most talked-about initial public offerings (IPOs) was Ola Electric’s August 2024 entry into the secondary market. SoftBank has made a substantial investment in Ola Electric, owning 17.83% of the company and contributing more than ₹2,800 crore. One of the most valuable assets in SoftBank’s portfolio, Ola Electric’s valuation contributed $401 million to the Vision Fund during the July–September 2024 quarter.
Sumer Juneja, SoftBank’s managing partner for India and EMEA, spoke recently with CNBC-TV18 about the company’s strategy for Ola Electric. He emphasized SoftBank’s commitment to Ola Electric, saying, “We’re in no hurry to exit.” Juneja hinted that any exit plan would be gradual and dependent on Ola Electric’s performance and market conditions post-lock-in. This deliberate approach suggests that SoftBank sees Ola Electric as a key player in India’s EV market, where two-wheelers are rapidly becoming a preferred choice for electric mobility.
India’s EV Market: A Promising Frontier for SoftBank
India’s EV industry is developing quickly, particularly as the market develops and government subsidies are progressively reduced. Juneja is hopeful about long-term growth despite the decrease of subsidies, estimating that EV penetration might reach 30–40% in the next five to ten years. This trajectory could allow Ola Electric, a company that specializes in reasonably priced electric two-wheelers, to access one of the biggest two-wheeler marketplaces in the world, making EVs a sensible financial option for Indian consumers.
With India moving toward EV adoption at scale, SoftBank’s investment aligns well with the country’s priorities for reducing fuel dependency and lowering carbon emissions. Ola Electric’s Gigafactory, which produces battery cells and is advancing EV technology, reflects a serious commitment to domestic production and innovation in the sector.
SoftBank’s Calculated Approach to Exits
SoftBank’s approach to its Indian investments indicates a shift from the “cash-in, cash-out” strategy to a more long-term, value-driven one. Sumer Juneja’s comments on CNBC-TV18 highlight this approach, particularly in the case of Ola Electric. While acknowledging that SoftBank could exit Ola Electric once the lock-in period ends in six months, Juneja stressed that any exit would be “thoughtful” and “gradual.” This approach underscores SoftBank’s recognition of Ola Electric’s potential to grow, even as the EV market faces challenges and competition.
For Swiggy, there may be no rush either. While an IPO often opens up liquidity options, SoftBank could wait to see Swiggy solidify its market position and close the profitability gap with Zomato. Both companies represent SoftBank’s strategic placement in high-growth sectors that are rapidly digitizing and expanding in India.
