Swiggy's unlisted shares gain momentum amid IPO buzz of near $15 billion valuation

Swiggy's IPO is among the most anticipated primary market offerings for this year as the Softbank-backed Indian food delivery player is eyeing a $15 billion valuation for its issue. According to some media reports, the company is likely to raise about Rs 8,500-10,000 crore via its initial public offering (IPO).
 

Swiggy had received shareholder approval in April to launch an IPO. Interestingly, the company has been seeing some actions in the pre-IPO or unlisted market amid the IPO buzz. The stock has successfully managed to draw investors' attention in the primary markets, with stock prices rising sharply higher.
 

Swiggy's shares were initially sold at Rs 350 per share, which jumped to 400 last week in just few days. The stock is currently exchanging hands at Rs 440-450 apiece. However, availability of a limited quantity of stock may pump the prices in the unlisted, cautioned the dealers trading in the space.
 

Sandip Ginodia, Founder and CEO of Kolkata-based Altius Investech said that Swiggy is drawing investors' attention following the secular rally in Zomato, its nearest comparable peer. However, the IPO bound new age company is still burning cash and yet to turn profitable.
 

"We have always been skeptical of companies with a negative bottomline but one cannot deny the fact that these companies have a solid rate of growth and customer acquisition. Overall, one needs to see how the path of profitability pans for the Swiggy," he said.
 

Market participants believe that a $15 billion valuation may not be a major challenge for Swiggy. US Investor Baron Capital has valued food-tech company Swiggy at $14.74 billion as of June 2024, according to information available on its website. However, its estimate crippled down about 3 per cent from $15.1 billion valuations estimated in March this year.
 

Swiggy reported Rs 5,476 crore in revenue from operations and a Rs 1,600 crore loss during the first three quarters of the financial year FY24. Swiggy's investor 360One WAM valued it at $11.5 billion, as per some media reports. Swiggy's nearest peer Zomato is valued around $27-28 billion at current valuations.
 

Dinesh Gupta, Co-founder of NCR-based boutique firm UnlistedZone said that Swiggy is definitely drawing investor's attention and this has been a trend in the unlisted market, where IPO bound companies have been the buzz word.
 

"The current valuations of Swiggy leave some upside potential considering the multiples of Zomato and the company valuations. It is trading at discount to Zomato as the profitability is yet to be seen. Overall, it currently trades roughly at half of Zomato's market capitalization and media reports suggest that IPO is likely to come around those levels only," he said.
 

According to Goldman Sachs, quick deliveries accounted for $5 billion, or 45 per cent, of India’s $11 billion online grocery market in April. It has forecast the segment to reach a 70 percent share of that market by 2030.  Just to note, Swiggy’s food delivery business is profitable but grocery delivery Instamart business is still loss making.  
 

Hitesh Dharawat, Owner of Dharawat Securities, a Mumbai-based firm dealing in unlisted stocks said that digital-based stocks are getting their mojo back and are appealing to the investors.
 

"Listed peers command higher premium as valuations is better unlocked, while unlisted market lacks a fair price discovery in that sense. Long cut short, investors have fancy for Swiggy shares before its IPO," he said.