Valuation expert Aswath Damodaran, often called the “Dean of Valuation,” weighed in on Swiggy’s IPO, cautioning that this isn’t just a bet on a food delivery app—it’s a stake in the future of India’s economic and cultural transformation.
Speaking on The India Opportunity Podcast with Shrishti Sahu, Damodaran explained, “With Swiggy, I would look at the same determinants…it’s a joint bet on India’s growth as a country, because, let’s face it, without India growing into its income, restaurants will not be able to make money, and without restaurants, you will not get restaurant delivery.”
Comparing Swiggy with Zomato, Damodaran emphasized that both companies operate on a “time arbitrage” model, leveraging India’s urban infrastructure challenges to save time for customers.
“Zomato is arbitraging that logistics problem, and Swiggy might be able to as well,” he said, adding that they’re capitalizing on the mess of urban infrastructure that makes even short errands time-consuming.
On the much-hyped “quick-commerce” trend in India, where groceries and essentials are delivered within minutes, Damodaran remained skeptical. “I’m never quite sure what to make of words that emerge, like quick commerce,” he said.
“But if there’s one advantage Swiggy and Zomato have, it’s their existing platform. They already have drivers, and expanding their model—asking drivers to pick up groceries or even laundry—is an extension of what they do.”
As for Swiggy’s valuation, Damodaran drew a clear distinction between “price” and “value,” explaining that the lower multiple Swiggy may trade at reflects its position behind Zomato in the market. “If you ask me, should Swiggy trade at a lower multiple? I’d say yes. Zomato is further advanced in its life cycle, has shown it can turn from losses to profits, and Swiggy hasn’t done that,” he said.
Damodaran also highlighted the importance of realistic expectations for long-term investors. “Look past the current numbers. You’re not buying last year’s financial statement…you’re buying potential, the expectation that India’s infrastructure issues won’t disappear, and these companies will leverage that to become first movers,” he advised.
Swiggy’s IPO received a modest response, with a subscription rate of just over 3 times and a grey market premium of only ₹1 per share, indicating cautious optimism. With a history of net losses and ongoing cash flow issues, Swiggy proposes to use IPO funds to invest in its technology and brand expansion, a move Damodaran believes is essential for future growth in a market as volatile as India’s.