Swiggy IPO: Key strengths, risks and financials from RHP you need to know

Swiggy IPO, with a price band of ₹371-₹390 per share, is open for subscription from November 6 to November 8. The issue, which collected ₹5,085 crore from anchor investors, aims to raise ₹11,327 crore via a fresh issue of equity shares aggregating to ₹4,499 crore and an offer-for-sale of ₹6,828 crore. As the initial public offering is underway, here's a look at the food delivery and quick-commerce major's strengths, risks, and financials.

Swiggy IPO: Strengths

• Swiggy operates in the food delivery and quick commerce space, which has potential because of its high frequency, habit-forming, and recall value.
• The company's food delivery segment had a gross order value (GOV) of ₹24,717.4 crore in the financial year 2023-24 (FY24) and delivered more than 577.7 million orders in the same period.
• The average monthly transacting users on the food delivery platform grew at a compound annual growth rate (CAGR) of 11.6% in the last three fiscals, reaching 14.29 million in FY24.
• In less than four years, the company scaled up Instamart from two cities to 32 cities as of June 30, 2024.
• In FY24, users on its platform showed increased engagement, transacting more frequently each month compared to other hyperlocal commerce players.
• The company's unified app fulfils tasks such as ordering food, eating out and delivering essentials.
• Preferred choice for delivery, brand, merchant, and restaurant partners as Swiggy's top 100 restaurants (by revenue) have been on the platform for an average of more than five years.
• Synergistic network effects from its extensive user and partner base allow rapid and efficient scaling of new offerings.

Swiggy IPO: Risks

• Swiggy has sustained net losses in each fiscal since incorporation. The company also has negative cash flows from operations.
• Unable to retain existing users or failing to acquire new customers can affect operations and finances.
• It faces intense competition in the food delivery and quick commerce segment.
• The company has limited experience operating a business at its current scale, complexity, and scope. It commenced operations in 2014 with online food ordering and later also moved to quick commerce, Dineout, Genie, etc.
• It operates in an industry susceptible to health concerns, and restaurants or delivery partners' failure to maintain hygiene might affect its reputation.
• The company accepts various payment methods, subjecting it to risks related to third-party payment processing.
• It does not have exclusive arrangements with its delivery, brand, merchant, and most of the restaurant partners.
• Seasonality, holidays, and occasions might cause fluctuations in sales and operations results.

Swiggy IPO: Financials