Ahead of IPO, Swiggy commands a GMP of 4% over issue price

The much awaited IPO of Swiggy is set to be launched on November 6 and investors can bid for the shares till November 8. However, the company has seen a muted demand for its shares in the grey market.

Earlier today, the company priced the IPO in the range of Rs 371-390 per share. However, the GMP, which started at around Rs 25-30, fell to just Rs 18, meaning grey market investors are willing to pay about Rs 415 for one Swiggy share currently. This indicates a premium of around 4% over the issue price.

A month ago, Swiggy shares were trading at Rs 515 in the unlisted market.

Also Read: Swiggy sets price band at Rs 371-390 for Rs 11,327 crore IPO. Check details

Swiggy is offering its IPO at a lower valuation of $11.3 billion, compared to its earlier target of around $15 billion. The reduction in valuations is attributed to prevailing market volatility and the lackluster debut of Hyundai India.Swiggy’s last private round valuation was $10.7 billion when it raised $700 million in a round led by US asset manager Invesco in January 2022.

The company has increased its fresh equity sale in the IPO to Rs 4,499 crore, while reducing its offer-for-sale (OFS) component to 17.5 crore shares.

The food delivery company proposes to use the IPO proceeds for investments in its material subsidiary, Scootsy, as well as for technology and cloud infrastructure improvements, and brand marketing and business promotion. These initiatives will be carried out over a four to five-year period.

Marquee funds BlackRock and the Canada Pension Plan Investment Board (CPPIB) are likely to invest in the IPO, which will be the country’s second-largest stock offering this year.

Swiggy competes with Zomato in India’s online restaurant and food delivery sector, with both companies making significant investments in “quick-commerce,” which involves delivering groceries and other products within 10 minutes.

After its IPO, analysts believe Swiggy will aim to achieve EBITDA positivity in the near term by reducing its promotional and advertising expenditures.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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