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Swiggy IPO Listing: The shares settled at Rs 412 apiece in pre-open trade, which is 7.69 per cent gain.
Swiggy IPO Listing.
Swiggy on Wednesday made a marginally higher listing over its issue price. The shares were listed at Rs 412 apiece on the BSE as compared with the issue price of Rs 390, which is an 8 per cent premium.
The shares had settled at Rs 412 apiece in pre-open trade, which is 7.69 per cent gain.
The price band of the Swiggy IPO was fixed at Rs 371 and Rs 390 apiece.
The initial public offering, which was opened for public subscription between November 6 and November 8, received a 3.59 times subscription garnering bids for 57.53 crore shares as against the 16.01 crore shares on offer.
JM Financial had initiated a “Buy” on Swiggy with a target price of Rs 470.
“The duopoly structure in the sector should support steady growth and profitability for Swiggy,” it added.
Instamart is essentially a play on the broader retail market and holds immense potential for growth, it said.
“While Swiggy presents a decent upside on an absolute basis, we would prefer Zomato if asked to choose between the two. Zomato’s superior execution in the past and its market leadership across key segments make it a more favorable option. We recommend that investors consider both companies, with a higher weightage toward Zomato, as both are likely to be among the fastest-growing names in the consumption space,” JM Financial added.
Macquarie also initiated coverage on Swiggy with an underperform rating and a target price of Rs 325.
Macquarie said that it is a long runway for Swiggy, but a bumpy winding path to profit can be seen. Swiggy, India’s number-two consumer app, has a clear path to catch up with the leader Zomato. Quick Commerce is more complex, with no sustainable economic profits. The global brokerage firm expects the group’s EBIT breakeven in FY28E even with 23% core revenue CAGR.
Swiggy’s contribution margin is almost at par with the leader Zomato. On the adjusted EBITDA margin level, the gap is wider due to a smaller GOV base to absorb higher central branding and employee costs. Macquarie stated that it sees Swiggy bridging this profitability gap with 30% higher transacting users.
Swiggy IPO Listing: What Should Investors Do Post-Listing?
Shivani Nyati, head of wealth at Swastika Investmart, said, “The IPO’s valuation, while appearing reasonable based on certain metrics, presents a challenge due to negative earnings. Additionally, the current volatile market conditions may further impact the listing performance.”
Given these factors, a cautious approach is recommended. Investors with a high-risk tolerance and a long-term perspective may consider the IPO, but it’s essential to acknowledge the potential risks associated with the company’s current financial position and the broader market uncertainties, she said.
Prashanth Tapse, senior vice-president (research) and research analyst at Mehta Equities, also recommended risky investors to hold Swiggy’s shares for the long term.
“Despite being the second-largest e-commerce and food delivery player, it received a sluggish response from overall investors. While on a consolidated basis, the overall subscription figures look good, but Day-3 Qualified Institutional Buyers (QIB) investors supported Swingy ipo helping it to successfully sell out, which looks similar trend to Hyundai Motors IPO,” he said.
