One of the biggest food delivery services in India, Swiggy, has increased the amount of its primary issue from ₹3,750 crore to ₹5,000 crore, marking a major step toward its public market debut. The resolution, which was accepted during an Extraordinary General Meeting (EGM) on October 3, 2024, highlights Swiggy’s intention to fortify its financial position in the face of intense competition in the rapid commerce and food tech sectors. The company is currently in position to raise between ₹10,414 crore and ₹11,664 crore, including the offer for sale (OFS) component, making it one of the largest initial public offerings (IPOs) by a new-age digital company in India.
Credits: Money Control
Swiggy’s IPO: A Major Leap for the Food Tech Giant
This rise in the size of the primary issue indicates that Swiggy is ready to go public, as the company has been contemplating an IPO for several months. Insiders claim that the business has plans to expand by ₹1,250 crore if necessary, guaranteeing sufficient liquidity as it pursues its growth. The OFS, which stays at ₹6,664 crore, will let current investors cash out or partially depart.
With this calculated action, Swiggy is reacting to a market dominated by lucrative rivals like Zomato, Blinkit (acquired by Zomato), and other major players in rapid commerce like Flipkart Minutes and Tata BigBasket. Swiggy hopes to get a bigger market share and compete more fiercely by raising more money, particularly in the rapidly expanding quick commerce and grocery delivery sectors.
Navigating a Competitive Landscape
There is fierce rivalry in the Indian food tech business, yet Zomato and other leading companies continue to outperform in terms of profitability. With a 36% increase in revenue to ₹11,247 crore in FY24, Swiggy has been able to catch up to Zomato, which reported ₹12,114 crore in revenue in the same time. But Zomato has also made money; in FY24, it made ₹351 crore as opposed to Swiggy’s ₹2,350 crore loss.
The difficulty is exacerbated by the fact that Blinkit, Zomato’s rapid commerce division, and other websites like Flipkart Minutes and Tata BigBasket are gaining traction in Swiggy’s important markets. As these platforms take advantage of consumer demand for quicker deliveries and a greater choice of services, the competition in the grocery delivery market is getting more intense.
Swiggy will be able to expand its delivery network, invest in technology, and pursue future market expansion thanks to its decision to generate additional funds through its initial public offering (IPO). But its competitors aren’t doing nothing. Zomato is a strong rival due to its consistent profitability and 74% sales growth in Q1 FY25.
Financial Performance: Swiggy’s Push for Profitability
Even with the push from competitors, Swiggy has improved its financial performance. The company’s losses in FY24 were ₹2,350 crore, a substantial 44% decrease from ₹4,179 crore in FY23. A greater emphasis on operational efficiency and improved cost management were the main causes of this improvement.
Revenues for Swiggy increased from ₹8,265 crore in FY23 to ₹11,247 crore in FY24, suggesting that the business is expanding quickly. It is anticipated that the larger main issue in the IPO will facilitate strategic investments in new services, technology advancements, and client acquisition, therefore quickening this development trajectory even further.
But Swiggy had a minor setback in Q1 FY25, as its losses increased to ₹611 crore from ₹564 crore in the same period last year, an 8% increase. The corporation ascribed this rise to increased operating costs as it pursued expansion. Swiggy spent ₹3,908 crore in total during the course of three months, which is 27% more than the previous year.
Conclusion: A Promising but Challenging Road Ahead
Swiggy is doing everything it can to strengthen its standing in the industry as it gets ready for its initial public offering (IPO) later this year. Swiggy is making sure it has the financial capacity to negotiate a difficult and competitive environment by expanding the scope of its main problem.
