Tepid Listing: Swiggy Shares Make Muted Debut At 8% Premium From IPO Price On Exchanges; BUY?

Swiggy made a tepid debut on the National Stock Exchange (NSE) today, listing at Rs 420 per share-a premium of 7.69% over its IPO price of Rs 390. On the Bombay Stock Exchange (BSE), Swiggy's stock started at Rs 412 per share, marking a 5.6% premium. This much-anticipated IPO has put Swiggy in the spotlight, capitalizing on India's booming online food delivery and quick commerce sectors.

Swiggy's journey from an emerging food delivery platform to a household name has paralleled the growth of the Indian food delivery market. According to industry data, the sector expanded from Rs 112 billion in 2018 to an impressive Rs 640 billion in 2023. Projections suggest the market could reach between Rs 1,40,000 crore and Rs 1,70,000 crore by 2028, thanks to rising incomes, urbanization, and a shift in consumer lifestyle preferences.

Grey Market Premium (GMP)
Swiggy's grey market premium (GMP), which once indicated robust demand, has seen a downward trend leading up to the listing. Currently, Swiggy's shares are trading at only Rs 2 above the IPO price in the grey market, a sharp decline from a high of Rs 130 just two weeks ago. The GMP, which initially attracted enthusiastic interest from investors, dropped in response to market volatility and cautious sentiment across Dalal Street. Over the past week, the GMP for Swiggy shares has decreased from Rs 5 to Rs 2, indicating a tepid response from the grey market.

Swiggy's IPO Overview and Subscription
Swiggy's IPO, with a total size of Rs 11,327 crore, seeks to leverage its well-established brand in the food delivery space. The IPO comprised a fresh issue of Rs 4,499 crore along with an offer-for-sale (OFS) of 17,50,87,863 shares, allowing existing investors like Accel India IV, Apoletto Asia, Alpha Wave Ventures, Coatue PE Asia, DST EuroAsia, Elevation Capital, and Tencent Cloud Europe to partially exit.

The IPO received strong interest from institutional investors, as evidenced by a 6.02 times subscription rate from Qualified Institutional Buyers (QIBs). Retail investors (RIIs) subscribed 1.14 times, while Non-Institutional Investors (NIIs) showed a 41% subscription rate, reflecting decent interest among high-net-worth individuals. Employees of Swiggy also expressed confidence in the offering, with a 1.65 times subscription for shares reserved for them.

The IPO's subscription momentum built steadily across the three-day period, with day one seeing a 12% subscription rate, which rose to 35% by the second day. By the final day of bidding, the IPO had reached an overall oversubscription.

Managing the IPO
The IPO was managed by a consortium of merchant bankers, including Kotak Mahindra Capital Company, Citigroup Global Markets India, Jefferies India, Avendus Capital, JP Morgan India, BofA Securities India, and ICICI Securities. Link Intime India Private Ltd acted as the registrar for the offering.