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Swiggy-backer Accel says investors want diversification ahead of IPO launch

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By Vani Dua

3 min read | Updated on August 12, 2024, 17:28 IST

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SUMMARY

Accel, one of Swiggy's early venture capital investors, is confident that the IPO-bound company will garner investor interest despite the surge in stock prices of its rival Zomato.

Bangalore-based Swiggy has historically dominated the Southern states

Bangalore-based Swiggy has historically dominated the Southern states

While Swiggy is bucking up for its IPO listing, Accel, one of the early venture capital backers of the company, has shown confidence in the food delivery platform’s ability to generate investors’ interest regardless of the increase in its main competitor Zomato’s stock price.

"Public investors are smart. They look at every company for what it is capable of and what it is worth. And also investors want diversification. So everybody doesn't want to bet on just one asset or company in a particular space. I think investors will be discerning," Prashanth Prakash, partner at Accel, said at the Moneycontrol Startup Conclave on August 9.

According to regulatory filings, Swiggy received a go-ahead from its stockholders for a $1.2-billion initial public offering (IPO) in April this year. The company aims to raise up to ₹3,750 crore (around $450 million) through a fresh issue and up to ₹6,664 crore (around $800 million) through an offer-for-sale (OFS) component.

At the Moneycontrol conclave, Accel’s Prakash suggested that Swiggy is still the market leader in some regions. However, he didn’t mention which ones. This comes a week after Zomato’s management, during an earnings call, said that it has managed to gain market share in Southern states. Notably, the Bangalore-based Swiggy has been the market leader in these states for a while now.

“If you look at different parts of the country, different companies dominate. It's not one platform that has a dominant market share in every part of the country. And we have seen that those leaders in different parts of the country don't change so easily. I think there are reasons why there will be value in different platforms,” said Prakash of Accel at the conclave.

Many reports have indicated that Zomato’s share in Indian markets has grown to almost 55%, leaving Swiggy behind. While Swiggy was leading up until 2020, it has been losing ground to Zomato in the last few years.

Experts have implied that Zomato has been able to increase its share and establish a strong grounding due to its localised business model, which approaches every region uniquely.

Earnings-wise, Gurugram-based Zomato has reported net profits for the past five quarters. Swiggy, on the other hand, posted an operating loss of more than ₹1000 crore in the first nine months of FY24, Moneycontrol mentioned citing reports.

In the first quarter of FY25, Zomato reported a profit of ₹253 crore, significantly higher than ₹2 crore in the year-ago period.

Uplearn

About The Author

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Vani Dua is a journalism graduate from LSR College, Delhi. She is passionate about news and presently covers markets, business, economy, and other related fields. She is an avid reader and loves to spend her time weaving stories in her head.

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