Swiggy Boosts IPO Size: Plans to Raise Rs 5,000 Crore in Fresh Issue, Up from Rs 3,750 Crore

Food tech giant Swiggy is considering increasing the size of its upcoming Initial Public Offering (IPO) by raising more capital through a fresh issue of shares. According to internal documents reviewed by Moneycontrol, the company had originally planned to raise Rs 3,750 crore (approximately $450 million) via a fresh issue of shares. However, Swiggy now intends to raise Rs 5,000 crore (around $600 million), reflecting an increase of Rs 1,250 crore or about $150 million. This move is aimed at strengthening the company's financial reserves as it faces intense competition in the food tech and quick commerce sectors.

Swiggy's IPO: From Rs 3,750 Crore to Rs 5,000 Crore

Swiggy had initially targeted a total IPO raise of $1.25 billion, which included Rs 3,750 crore through a fresh issue of shares and Rs 6,664 crore (approximately $800 million) through an offer-for-sale (OFS) by existing shareholders. However, with the proposed increase in the fresh issue, if approved by Swiggy’s board at its extraordinary general meeting (EGM) on October 3, the overall IPO size will rise to about $1.4 billion. This would include the additional $150 million through the fresh issue, while the OFS component would remain unchanged for now.

Competitive Landscape in the Quick Commerce Sector

Swiggy's decision to raise additional capital comes as competition within the food delivery and quick commerce sectors intensifies. Since the company first filed its draft IPO papers in April, competitors such as Zomato and Blinkit have improved their financial performance, driving up their market capitalizations. Meanwhile, emerging players like Zepto have managed to attract significant investor attention, raising $1 billion in just the last two months. The increasing number of well-funded rivals is pushing Swiggy to prepare a more robust financial war chest as it enters this competitive market.

Additionally, larger players such as Walmart have expanded their presence in the rapid delivery space through the launch of Flipkart Minutes, which has further heightened the competition. As competitors strengthen their market positions, Swiggy is aiming to bolster its finances through its IPO to maintain its market share.

Secondary Share Transactions Surge Ahead of Swiggy's IPO

In the lead-up to Swiggy's public offering, there has been a notable uptick in secondary share transactions, indicating growing investor interest. Since April, when Swiggy’s IPO plans were first revealed, there has been increased activity around the company’s shares. Market participants are eagerly awaiting the IPO as rivals have continued to show improvements in profitability and market value. This, in turn, has sparked a significant rise in the trading of Swiggy shares among investors.

However, Swiggy has remained tight-lipped regarding this development. When reached for comment, the company did not respond to Moneycontrol’s queries. Meanwhile, news of the IPO size increase was first reported by the website Entrackr.

Improved Financial Performance in FY24

Swiggy’s decision to raise more capital coincides with its improved financial performance during the financial year 2024 (FY24). Although it still lags behind its main rival Zomato in several key metrics, Swiggy has made considerable progress in narrowing the gap. Swiggy’s revenue increased by 36%, growing from Rs 8,265 crore in FY23 to Rs 11,247 crore in FY24. At the same time, the company managed to significantly reduce its losses by 44%, from Rs 4,179 crore in FY23 to Rs 2,350 crore in FY24.

This improvement in Swiggy's financials is largely attributed to better control over its expenses, a strategic move as the company prepares for its listing on the stock exchanges later this year. The reduction in losses and growth in revenue are critical milestones for Swiggy as it seeks to strengthen its financial foundation before going public.

Swiggy vs. Zomato: The Rivalry Intensifies

Swiggy’s growth in FY24 brings it closer to its primary competitor, Zomato, but there is still a gap to bridge. Gurugram-based Zomato posted revenue of Rs 12,114 crore for FY24, slightly higher than Swiggy’s Rs 11,247 crore. However, the key difference between the two lies in their profitability. While Swiggy continues to operate at a loss, Zomato reported a profit of Rs 351 crore in FY24. This highlights a significant advantage for Zomato as it maintains profitability while continuing to grow.

Despite trailing in terms of profitability, Swiggy’s improving financials suggest that the company is taking steps to close the gap. The additional capital raised through its IPO will likely give Swiggy the resources it needs to remain competitive and pursue further growth opportunities in the future.

Looking Ahead: Swiggy’s IPO Plans

Swiggy’s decision to increase the size of its IPO is a strategic move to ensure that it is well-equipped to handle the challenges of a highly competitive market. The additional capital will provide Swiggy with the financial flexibility to invest in new initiatives, expand its services, and maintain its competitive edge in the food delivery and quick commerce sectors.

As the company awaits the approval of its board at the EGM on October 3, all eyes will be on Swiggy’s next steps. If the board gives the green light, Swiggy's IPO will raise approximately $1.4 billion, positioning the company for a successful listing and a stronger presence in the market.