Swiggy shares set for modest listing post IPO; analysts suggest holding stock for long-term

Swiggy valuation has been pegged at about Rs 95,000 crore at the upper end of the price band.

Swiggy shares are set to be listed on the exchanges on November 13 following a subscription of 3.59 times in its 3-day subscription window between November 6-8 in the primary market.

Despite being the second-largest e-commerce and food delivery player, the initial share sale by the company got a sluggish response from investors. The issue was fully subscribed on the final day of bidding supported by QIB investors on day 3, a similar trend that was seen in Hyundai Motors IPO.

Analyst believe a modest listing for shares of the company on Wednesday. "We believe Swiggy to list at par or with marginal premium on bourses. But looking at financials the company decision to reduce the valuation in the IPO from $14 Bn to $10.2 bn bodes well and leaves little room for investor’s gains. Therefore, we believe that Swiggy is well positioned to tap huge opportunity in quick commerce and as it is fairly priced the issue may be considered for long term post listing," said Narendra Solanki, Head Fundamental Research - Investment Services, Anand Rathi Shares and Stock Brokers.

Swiggy operates in India's rapidly growing online food delivery and quick commerce sectors, which have seen significant expansion. The online food delivery market grew from Rs 112 billion in 2018 to Rs 640 billion in 2023 and is projected to reach Rs 1,400-1,700 billion by 2028, driven by rising incomes, urbanization and shifting lifestyle preferences.

Prashanth Tapse, Sr VP Research Analyst at Mehta Equities Ltd said "considering low subscription demand from NII’s & Retail investors followed by market sentiments, there is a very high possibility of flat to negative listing in the range of +or - 5-10% on its issue price."

Swiggy, a pioneer in online food delivery and quick commerce, is well-positioned to benefit from these trends, particularly in smaller cities, where demand for convenience is rising.

Akriti Mehrotra, Research Analyst, StoxBox said "Despite reporting consistent losses, the company has demonstrated steady revenue growth. Its strategy to expand dark stores, optimize logistics, and diversify offerings aims to drive future profitability."

"We recommend holding Swiggy shares with strong growth potential for a medium- to long-term investment outlook," she added.

Swiggy is also focussing on accelerating its Instamart service and narrowing the market share gap with competitors like Zomato and Blinkit.

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