Swiggy shares surge 15% on debut after India’s second-largest IPO of 2024

The online food delivery company raised $1.34 billion

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Swiggy, India’s prominent online food delivery company backed by SoftBank, saw a 15% jump in its shares on the debut day of trading, following a successful IPO that raised 113.27 billion rupees ($1.34 billion).

Here are some key points:

• This marks India’s second-largest IPO of 2024, trailing only Hyundai Motor India’s recent $3.3 billion listing. Swiggy’s IPO, oversubscribed over three times, included both a sale of existing shares and new share issuance, with proceeds earmarked for debt repayment, acquisitions, and further investments in its subsidiary Scootsy.

• While Swiggy has potential for growth, especially in its “quick commerce” grocery delivery segment, analysts at Macquarie raised profitability concerns, noting challenges in scaling beyond major cities and facing regulatory and inflationary pressures.

• Swiggy’s Instamart arm, catering to the rapidly growing quick commerce sector, has room to expand but must contend with fierce competition from giants like Amazon.

• Swiggy also faces a long journey toward profitability in food delivery, where it trails Zomato, though it benefits from having only one major competitor in that market.