Swiggy shares down 5% after lock-in expires, investors book profit

Shares of the food delivery and quick commerce company Swiggy fell by nearly 5% on the bourses in early trade on Wednesday, December 11. This comes as investors booked profits after the one-month lock-in period for anchor investors expired today.

The stock declined by over 5% each on the BSE and (NSE) to ₹515.95 and ₹516.50 apiece, respectively, erasing the gains of yesterday’s session.

Swiggy listed at a premium of 7% on November 13 and the one-month lock-in period for the anchor investors ended on December 11.

Following the lock-in expiry, as many as 6.5 crore shares of Swiggy became eligible for trading and opened the way for investors to sell 50% of their holdings. These shares make up 3% of the equity stake in the company. The rest of the 50% shares held by the anchor investors will become eligible for selling on February 9 when the lock-in period expires.

The market valuation of Swiggy dropped to ₹1.16 lakh crore on the NSE and the BSE.

Shares of the company climbed by nearly 6% during Tuesday’s session following the investment group CSLA backed the stock. In early trade on December 10, shares increased by as much as 5.7% to ₹567.9 on the NSE.

During the morning trade, the 30-share BSE Sensex increased by 98.71 points (0.12%) to 81,608.76. Similarly, the NSE Nifty advanced 45.65 (0.19%) to 24,655.70.

Who are anchor investors?

Anchor investors are institutional investors who buy the shares of an IPO-bound company before the issue goes public. These investors buy a substantial portion of shares of the company and commit to the IPO before it goes live. They generally include mutual funds, insurance companies and foreign portfolio investors, among others. These investors have a lock-in period of 30-90 days in which they can’t sell the company’s shares.

For the first 30 days, they can’t sell any shares. After the one-month lock-in period ends, they are eligible to sell 50% of the shares. The remaining can be traded after the 90-day lock-in ends. It is important to note that the ending of a lock-in period doesn’t mean that all the shares of the company that became eligible for trading will be sold, it just means that the anchor investors are now allowed to sell them.

Swiggy IPO and Q2 results

The Swiggy IPO was open for subscription between November 6 and November 8. The ₹11,327-crore offer was booked 3.59 times.

The shares listed at ₹420 on the NSE and at ₹412 on the BSE, resulting in a 7.69% and 5.64% premium as compared to the issue price of ₹390, respectively.

The stock has jumped by nearly 35% since the listing and, even with the dip recorded today, it is trading 30% up from its issue price.

Last week, Swiggy posted a net loss of ₹625.53 crore for the second quarter of the current fiscal year as compared to the ₹657 crore net loss posted in the year-ago period.

Revenue from operations of the company jumped to ₹3,601.45 crore in the reporting quarter, increasing from ₹2,763.33 crore posted in the same quarter of the previous year.

Amazon India’s quick commerce platform

Shares of Swiggy and one of its primary competitors in the quick commerce sector Zomato fell more than 4% on Wednesday, December 11, after reports hinted that Amazon India could launch its 15-minute delivery service by the end of December in Bengaluru. Many other details including the name of Amazon’s quick commerce venture are yet to be disclosed.

Shares of Swiggy are currently trading 4.08% down at ₹521.55 on the NSE and Zomato’s stock is 1.72% down at ₹290.75 apiece on Wednesday, December 11.