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Behind the scenes: Swiggy's IPO valuation and recent app innovations
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5 min read | Updated on November 06, 2024, 12:53 IST
SUMMARY
Swiggy’s IPO has arrived at your doorstep! By now, you have already read multiple comparisons, and news articles about it. But before you decide the next step - we thought it would be interesting to look at the valuations of these entities. We will also look at some of the lesser-known app-specific features that may have gone unnoticed but are helping to greatly enhance the user experience for the consumers.
Food delivery player Swiggy's IPO opens for retail investors today
With the price band of ₹371-₹390 now decided, we also look at the valuations of the company and compare it to peers. Below is a comparison of valuation ratios for Swiggy as compared with Zomato and Doordash.
Comparing Zomato and Swiggy’s valuations alongside DoorDash’s metrics offers a global perspective, giving a hint as to how metrics change based on differences in revenue models, market scale, and profitability across regions. What’s DoorDash you ask? DoorDash, Inc. is an American food ordering and food delivery company. It has a market share of greater than 50% in the food delivery space making it the largest player in the USA.
Valuations
Below is a comparison of valuation ratios for Swiggy as compared with Zomato and Doordash Inc. Comparing Zomato and Swiggy’s valuations alongside DoorDash’s metrics offers a global perspective, giving a hint as to how metrics change based on differences in revenue models, market scale, and profitability across regions.
| Particular | Monthly active users (in Cr) | Latest reported Revenue / EBITDA | EV/Revenue | EV/EBITDA |
|---|---|---|---|---|
| Swiggy (India) | 1.3 | Revenue: ₹ 3,222 Cr EBITDA: ₹ (597.8) Cr | 0.90x to 0.94x* | NA |
| Zomato (India) | 1.8 | Revenue: ₹ 4,799 Cr EBITDA: ₹ 226 Cr | 13.6x | 148x |
| Doordash (USA) | 3.7 | Revenue: ₹ 22,779 Cr EBITDA: ₹ 4,487 Cr # | 5.1x | 266x |
Source: News articles, RHP, company releases
Note: Swiggy Enterprise Value (Lower Band/Higher Band) = (Total Issue Size * Lower / Higher Band Price) + Total Debt - Cash and Cash Equivalent + Minority Interest + Preferred Equity
* Swiggy EV (Lower Value) = (29.04 Cr * ₹ 371/share) + (95.9+115.2)-(887+3.8) = ₹10,094 Cr
Swiggy EV (Higher Value) =(29.04 Cr * ₹ 390/share) + (95.9+115.2)-(887+3.8) = ₹10,647.3 Cr
Swiggy has a negative EBITDA so EV/EBITDA cannot be calculated.
#At an exchange rate of ₹ 84.18 / USD
We note here that recent news articles have indicated that Swiggy is internally aiming for a company valuation of ~$12.5-13.5, which is a ~10-15% cut in its original target, due to market volatility.
App features
While the investing public talks about the usual business metrics of revenue, profit, and return ratios, the app’s success is also influenced by the work done by its developers and UI, UX teams. Apps that prioritize user-centric design by regularly incorporating feedback into updates build stronger connections with their audiences.
Here is a table comparing some recent features of Zomato and Swiggy:
| Feature | Swiggy | Zomato |
|---|---|---|
| Payment integration | Introduced Swiggy UPI, enabling in-app UPI payments for a smoother, faster checkout process. (Launched in Aug 2024) | Uses multiple payment gateways; no exclusive UPI integration update mentioned recently. |
| Social sharing | Launched “Eatlists,” allowing users to create and share curated food lists with friends. (Launched in Jul 2024). | No similar feature, though it emphasizes personalized food recommendations. |
| AI personalisation | Uses AI for personalised recommendations within its grocery and quick-commerce services | Leverages AI to enhance order recommendations, aiming to increase average order value |
| Dark mode | Dont want people to find what you ordered - use dark mode | Dont want people to find what you ordered - use dark mode |
| Eco-friendly initiatives | Sustainable packaging, reduced plastic usage | Sustainable packaging, reduced plastic usage |
Source: News articles
Since Doordash has been doing this for quite some time now, let’s take a look at some of the features.
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Grocery and retail tabs: New tabs streamline grocery and retail shopping from various stores.
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Multiple carts: Users can manage separate orders (e.g., groceries and meals) in distinct carts.
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SNAP/EBT payments: DoorDash now accepts SNAP/EBT for grocery deliveries, enabling users with government food assistance programs to pay for groceries from select stores on the app.
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Earn by time: Dashers can choose a guaranteed hourly rate, alongside traditional per-offer earnings.
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Post-checkout tipping and location sharing: Customers can tip up to 30 days later, and Dashers can share their location with trusted contacts.
Conclusion
So, there you have it—a short peek into Swiggy’s IPO valuation and its recent app features. Whether you’re an investor eyeing the next big thing or just curious about Swiggy's edge over the competition, this analysis gives a fair hint. The main thing to take home is that apart from the usual hype that follows every IPO, a gander at some of the finer details can serve investors well in the long run.
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