Swiggy To Sponsor Shark Tank Season 4 Ahead Of IPO, Zomato CEO Deepinder Goyal 'Kicked Out'

Food and grocery delivery giant Swiggy is on the verge of finalizing a Rs 25 crore deal to sponsor the fourth season of the popular show Shark Tank India. However, the agreement comes with a significant stipulation-Swiggy has requested that Zomato founder and CEO, Deepinder Goyal, be barred from returning as an investor on the show, according to reports from Moneycontrol.

This development sheds light on the intensifying competition between Swiggy and Zomato, the two dominant players in India's food delivery and grocery market. While the companies were once neck and neck, Zomato has widened the gap in recent years, gaining a considerable lead in both sectors. The move also signals Swiggy's escalating marketing efforts as it prepares for its long-awaited IPO.

Swiggy's IPO Plans

Swiggy, which filed its Draft Red Herring Prospectus (DRHP) in late September, is gearing up for a Rs 5,000 crore initial public offering (IPO). The offering will consist of a fresh issue of equity shares worth Rs 3,750 crore and an offer-for-sale (OFS) of 185.29 million equity shares by its existing shareholders. This public listing comes three years after Zomato's successful IPO, which saw its stock skyrocket by 125% this year.

A significant chunk of Swiggy's IPO proceeds-Rs 950 crore-will be allocated to brand marketing and awareness, part of its strategy to expand its customer base and grow its market presence.

Deepinder Goyal's Exit from Shark Tank

At the ET Startup Awards 2024 on October 5, Deepinder Goyal confirmed that he would not be returning as an investor on Shark Tank India due to Swiggy's sponsorship. "I, unfortunately, can't go back because Swiggy sponsored Shark Tank this time and kicked me out," Goyal stated. He added, "Apparently, that's what I heard. They said that this is the sponsorship, and DP (Deepinder Goyal) can't be on the show."

Goyal, who debuted as a "Shark" on the third season of the show, quickly gained popularity for his sharp insights and candid interactions with the pitching entrepreneurs. His presence on the show was well-received by both the audience and social media.

Swiggy vs Zomato

Swiggy's rivalry with Zomato has become more pronounced in recent years, as both companies vie for supremacy in the food delivery and quick commerce sectors. Currently, Zomato's market capitalization stands at $25 billion-more than double Swiggy's estimated $10 billion valuation. Zomato's food delivery service accounts for 46.17% of its revenue, with other revenue streams coming from its B2B Hyperpure business and Blinkit, which competes directly with Swiggy's Instamart.

Swiggy, however, has made significant strides in reducing its losses. In FY24, the company reported a 43% reduction in losses, bringing them down to Rs 2,350 crore. During the same period, Swiggy's revenue from operations grew by 36% to Rs 11,247 crore. For the April-June quarter of FY25, the company's revenue reached Rs 3,222 crore, an increase from Rs 2,389 crore in the same quarter the previous year. However, rising expenses-up from Rs 3,073 crore to Rs 3,908 crore-caused Swiggy's losses to widen to RS 611 crore during Q1 FY25, compared to Rs 564 crore the previous year.

In contrast, Zomato reported a revenue of RS 4,206 crore for the same quarter, marking a 74% year-on-year growth. Additionally, Zomato turned a profit of Rs 253 crore in Q1FY25.

Swiggy's Updated DRHP

Swiggy filed an updated DRHP with the Securities and Exchange Board of India (SEBI) on September 26, 2024, outlining its IPO structure. The fresh issue of shares will be valued at Rs 3,750 crore, while the OFS component, which includes 18.53 crore shares, could potentially bring in another Rs 6,500 crore, assuming a price of Rs 350 per share.

Moreover, at an extraordinary general meeting (EGM) held on October 3, Swiggy's shareholders approved a resolution to increase the size of the primary issue from Rs 3,750 crore to Rs 5,000 crore. This increase gives the company the flexibility to raise additional capital if needed, though the size of the OFS remains unchanged.

Swiggy's growing marketing expenses and increased IPO size signal the company's ambitions to challenge Zomato's market dominance head-on. However, the financial performance of both companies presents a mixed picture. While Swiggy has made progress in cutting losses and expanding revenue, it still trails behind Zomato in terms of profitability and overall market share.