Swiggy, one of India’s biggest food delivery platforms, is all set to make history with its much-anticipated Rs 11,664 crore IPO. Investors from all walks of life—everyday buyers to high-profile celebrities—are excitingly eyeing this event. Among them are Bollywood legends like Amitabh Bachchan and Madhuri Dixit, along with sports icons such as Rahul Dravid and Zaheer Khan. So, what makes this IPO so special, and why is everyone from celebrities to seasoned investors eager to grab a slice of Swiggy? Let’s break it down.
Swiggy’s Super App Model: A Key Differentiator
While many compare Swiggy to its competitor, Zomato, there’s a fundamental difference in how these two companies operate. Swiggy functions as a “super app,” offering multiple services—food delivery, groceries via Instamart, and parcel delivery with Swiggy Genie—all under one roof.
Think of Swiggy as a shopping mall where all the stores share the same infrastructure, from security to payments. Each service seamlessly integrates, allowing Swiggy to leverage its existing user base to cross-sell and upsell across different categories. For instance, a user ordering dinner might be tempted by a discount on groceries from Instamart. This approach keeps marketing costs low and increases customer retention.
Zomato, on the other hand, follows a different path. It runs multiple standalone apps—Zomato for food delivery, Blinkit for groceries, and District for other needs. Each app requires its own marketing budget, tech team, and customer acquisition efforts. This results in higher costs, as each platform must independently build its user base.
Why Investors Are Flocking to Swiggy Despite Losses
One question on everyone’s mind is: why are investors, including big-name celebrities, lining up for Swiggy’s IPO despite it being a loss-making company? In FY 2024, Swiggy reported a total gross order value of Rs 35,000 crore, yet it’s still not profitable.
The answer lies in growth potential. Swiggy’s path to profitability mirrors that of Zomato, which was unprofitable for nearly a decade but recently turned the corner, becoming profitable just a few quarters ago. Many believe that Swiggy is on a similar trajectory, and with its super app model, the company is better positioned for long-term scalability and operational efficiency.
Four Key Advantages Swiggy Holds Over Competitors
Swiggy’s integrated approach offers several advantages that make it an attractive investment:
- Lower Customer Acquisition Costs: Once a user is onboarded for one service, say food delivery, it’s much easier and cheaper to convert them into a customer for other services like Instamart or Genie.
- Cross-Selling and Upselling: The unified platform allows Swiggy to leverage its vast amount of user data to promote relevant services across categories, increasing the average order value and customer lifetime value.
- Operational Efficiency: Running multiple services under one app reduces the need for separate tech infrastructure, cutting down on costs for maintenance, marketing, and user support.
- Scalability: Swiggy’s super app model provides room for expansion without having to develop new platforms for each service, making it more efficient and scalable in the long run.
Pre-IPO Excitement: Celebrities are Jumping in
Swiggy’s stock has already rallied by nearly 40% in the unlisted market, driven by the buzz surrounding its upcoming IPO. High-profile investors such as Amitabh Bachchan, Madhuri Dixit, Rahul Dravid, and Zaheer Khan have all made pre-IPO investments in the company. They, along with other public figures, are excited about Swiggy’s growth potential in the tech-driven food delivery and quick commerce space.
According to tennis star Rohan Bopanna, “Swiggy has not only transformed the way we order food but also how we think about urban convenience.” Many celebrities see this investment as a way to back a company that’s not just growing but reshaping urban living in India.
What to Expect From the IPO?
Swiggy plans to raise Rs 10,000 crore through the IPO, with Rs 3,750 crore as a fresh issue and Rs 6,664 crore through an offer for sale. Depending on the outcomes of its extraordinary general meeting, this amount could increase by Rs 1,250 crore.
With a valuation boosted to $13.3 billion by US-based Invesco, Swiggy is expected to generate massive interest from both retail and institutional investors. The IPO comes after the success of other tech-driven companies like Zomato, which saw significant returns during its stock market debut.
Also Read: Bajaj Housing Finance IPO Shatters Records
Swiggy’s ESOP Program: A Big Boost for Leadership
In a major move, Swiggy has granted its senior leadership team $270 million worth of stock options under its Employee Stock Ownership Plan (ESOP). According to Swiggy’s updated draft red herring prospectus, CEO Sriharsha Majety received a significant portion of this, with $200 million worth of stock options. This grant increases Majety’s stake in the company from 6.23% to approximately 8.73%. As part of the IPO, Majety will offload $7.5 million worth of his shares.
Other key executives also benefited from this generous ESOP program:
- Nandan Reddy (Co-founder): Reddy sold $12 million shares between July and September 2024.
- Madhusudhan Rao (CTO): Rao received many stock options, recognising his leadership in Swiggy’s tech innovation.
- Rahul Bothra (CFO): As Swiggy’s financial backbone, Bothra was rewarded for steering the company’s IPO preparation.
- Phani Kishan Addepalli (Chief Growth Officer): Addepalli was also granted substantial stock options under the new ESOP plan.
- Amitesh Jha (CEO, Swiggy Instamart): Jha received stock options worth $13.3 million following his leadership in expanding Swiggy’s Instamart.
- Rohit Kapoor (CEO, Food Marketplace): For his contributions since joining Swiggy in 2022, Kapoor was granted stock options worth around $9.8 million.
This ESOP initiative has been a crucial part of Swiggy’s strategy to retain top talent and incentivise its leadership ahead of the IPO, aligning its interests with the company’s growth.
Final Thoughts: Is Swiggy a Hype or a Smart Bet?
While Swiggy is still navigating the path to profitability, it’s clear that investors see a lot of potential in its unique business model. The super app approach not only offers efficiency and scalability but also sets Swiggy apart from its competitors. With big names backing the IPO and growing anticipation among retail investors, Swiggy is well-positioned to make a strong debut in the stock market.
The upcoming IPO could very well follow in the footsteps of Zomato, offering investors significant returns. As more and more people are looking to get in early, the question is no longer if Swiggy’s IPO will be successful, but rather, how big it will be.
FAQs
Ans. US-based Invesco is one of Swiggy’s largest investors, with its latest valuation boosting Swiggy to $13.3 billion.
Ans. Swiggy is valued at $13.3 billion, driven by its growth potential in food delivery and quick commerce.
Ans. No, Swiggy is not listed on the National Stock Exchange (NSE) as it is currently a privately held company.
Ans. Swiggy’s valuation is often competitive with Zomato’s, but Zomato was publicly listed, providing more transparency on financial metrics. Swiggy’s GOV for FY24 (at Rs 24,700 crore) is lower than Zomato’s (at Rs 32,200 crore).
Ans. To buy Swiggy pre-IPO shares, consider investing in venture capital funds or equity crowdfunding platforms that include Swiggy in their portfolios.
