Will Swiggy IPO be a Hit or a Miss on listing day? A detailed analysis of Swiggy’s valuation

The much talked about Swiggy IPO is all set to debut on the exchanges today. The Rs 11,327.43 crores issue subscribed over 3 times has seen a definitive decline in investor interest. The price band of the Swiggy IPO was set between Rs 371-390 per share and the expectation is that it will list around Rs 390. The Grey Market premium for the entity is now 0 indicating a muted start. The GMP has fallen from around Rs 25 before to Diwali to current levels of 0. The Swiggy IPO also includes 750,000 shares reserved for employees and it is being offered at a discount of Rs 25 to the issue price to them. Here is a quick look at how experts are valuing the Swiggy IPO at current levels – Geojit On Swiggy IPO – E-commerce poised for sustainable growth All eyes are on the Swiggy valuations. According to Geojit, the evolving demographic structures have led Indian consumers to shop more and increasingly use digital channels for their purchases, enabling online commerce platforms to expand to over 950 cities. “This shift allows consumer-centric technology platforms to engage with users at multiple touchpoints. Digitally-native consumers are fostering an internet-based ecosystem across various consumption categories, contributing to the growth of the online market,” they added. At the upper price band of Rs 390, they believe that “Swiggy is available at Mcap/sales of 7.8x (on FY24 financials), which appears to be fairly priced. Considering its strong brand recall, diversified offerings, integrated app, rapid scaling, consistentinnovation, expansion of dark stores, and promising industry outlook,” they look at it is as a potential value at current levels. Anand Rathi On Swiggy IPO – Well positioned to tap quick commerce opportunities Anand Rathi believes that “Swiggy is well positioned to tap huge opportunities in quick commerce. Therefore we believe that as it is fairly priced the issue may be considered for its long term growth as scales up its revenue and gradually improve its bottom line.” On Valuation parse, they added that at the upper price band the company’s implied market cap is around “Rs 872986 million value at price-to-sales of 7.8 times of its FY24 financials on post issue which appears to be fairly priced.” According to them, “With low cash burn, it is well positioned and funded to fight out with existing as well as any new entrants into this attractive space. Like its rival in its initial day’s food delivery operator is yet to turn profitable, but shows steady revenues and is scaling up its quick commerce vertical amid intense competition.” Incred On Swiggy IPO- Instamart’s growth prospects a positive In the current urban set-up, Incred believes that food delivery is likely to support Instamart’s growth aspiration and thereby lends value to Swiggy. According to them, Swiggy’s Instamart is strategically capitalizing on India’s rapid urbanization and rising demand for convenience by enhancing quick-commerce capabilities, diversifying into high-margin non-grocery categories, and employing a unified app approach to boost customer engagement and profitability.” They look at the food delivery business as the cash cow, driven by increased consumer adoption and the rising trend of online ordering in urban areas. According to them, “long-term opportunities in quick commerce provide growth runaway while the food delivery vertical has the potential to improve the margin and cash flow going ahead. Swiggy’s IPO price band implies 1) EV/revenue multiple of 6.5x, 2) EV/GOV of 2.1x, and 3) a P/S of ~6.7x based on annualized FY25F financials.” They believe that the valuation is at a discount to the already listed Zomato, which trades at an EV/revenue multiple of 11.3x, EV/GOV of 3.2x, (annualized) and a P/S of 11.4x based on FY25F consensus estimates. “Internal controls, as reflected in the auditor’s qualified opinion and increased competitive intensity, are the key downside risks,” as per Incred.

Will Swiggy IPO be a Hit or a Miss on listing day? A detailed analysis of Swiggy’s valuation

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