Indian food delivery giant Swiggy is reportedly in discussions with banks to initiate its Initial Public Offering (IPO) as early as next year, with plans for a stock market listing in 2024. The company has experienced renewed momentum after a pandemic-induced slowdown and is looking to capitalize on its recent success with a strategic IPO launch.
Renewed IPO Plans
Swiggy’s valuation was estimated at $10.7 billion during its last funding round in 2022. However, the onset of the pandemic led to a pause in IPO plans for several Indian startups. Swiggy has now regained its momentum and has approached prominent financial institutions to facilitate its IPO. The company is aiming for an IPO listing window between July and September 2024.
Valuation Strategy
Swiggy is likely to use its last funding round’s valuation of $10.7 billion as a reference point for its IPO valuation. This approach allows the company to gauge its stake sale and finalize its IPO strategy. While no specific details about stake sale or valuation have been disclosed yet, the company is expected to leverage its recent profitability as a positive indicator for investors.
Recent Financial Performance
In March 2023, Swiggy’s CEO and co-founder, Sriharsha Majety, announced that the company’s food delivery business achieved profitability, considering all corporate costs except employee stock option costs. In the fiscal year 2022, Swiggy posted a consolidated loss of INR 3,629 crore ($485 million) and a revenue of INR 5,704.9 crore ($762 million). The majority of this revenue, INR 3,444.4 crore ($459 million), was generated by the food delivery segment.
Competition and Market Dynamics
Swiggy faces competition from rival Zomato, another major player in the Indian food delivery market. Zomato turned profitable in the first quarter of FY24 with a consolidated profit after tax of INR 2 crore ($266,000). This shift in Zomato’s financials indicates growing investor confidence in India’s financial markets.
Additionally, the online grocery delivery sector is seeing significant growth. Zepto, an online grocery startup, recently secured a funding round of $200 million, valuing the company at $1.4 billion. This achievement marked Zepto’s entrance into the unicorn club, a term used to describe startups valued at over $1 billion.
Swiggy’s Path Forward
As a Softbank-backed company, Swiggy is actively involved in the IPO planning process. While the specifics of its stake sale and valuation are yet to be determined, the company’s profitable food delivery business and its strategic positioning in the market bode well for its IPO prospects. Despite challenges, Swiggy remains committed to growth and innovation as it navigates the path towards its anticipated IPO in 2024.
