Swiggy Broke All The Expectations With Its IPO !

Swiggy, India’s quick commerce giant, marked a niche in the startup world with a spectacular debut in the stocks on November 13, 2024. According to market analysts, Swiggy’s IPO fairly bettered the latter ones’ expectations and became one of the highly discoursed events of this year.

India’s food delivery major’s stocks opened at ₹420 on the National Stock Exchange, a 7.69% premium above the IPO price of ₹390, and rallied further to an intraday high at ₹449 for a gain of 15.12%. On the Bombay Stock Exchange, Swiggy’s stock opened at ₹412, up 5.64%. These transactions at the stock exchanges also busted initial market expectations and reflected the confidence investors had in Swiggy’s future prospects.

The ₹11,327-crore IPO of Swiggy marked a watershed moment for India’s growing digital and startup ecosystem, which achieved complete subscription by the final day of the offer with a 3.59 times subscription rate. The listing showed strong demand for the company’s stock besides giving a flash of wealth creation at its employee ranks.

Thanks to the Employee Stock Ownership Plan under which nearly 500 of Swiggy’s employees are expected to turn crorepatis from the gains from the IPO. As of September 2024, ESOPs outstanding from Swiggy stood at 231 million with a value of ₹9,046.65 crore. This IPO will benefit around 5,000 employees of the company in total, a great moment in the history of the company in turning its employees into more empowered members of society.

Strategic Investment From Global Giants

The occasion comes at a time when the food delivery and the tech startup industries are fast-growing in India. The development shows that Swiggy stands out as a market leader while marking the maturity of India’s startup ecosystem wherein companies now look toward public markets for funding and growth.

Such investment giants as Prosus and SoftBank play a very important role in the efficient execution of Swiggy’s IPO. They play an essential role in the shaping of strategy, pricing, and overall positioning of the company in the market.

SoftBank has been a very relevant investor in Swiggy for a long period of time. The company has demonstrated a lot of belief in the long-term growth prospects of the company.Refreshingly candid about the challenges of going public in a volatile market, Sumer Juneja has headed EMEA & India investing at SoftBank. “We’re all breathing a sigh of relief now that the stock’s up 10-12%, but it hasn’t been easy,” he admitted, pointing to the uncertainty that has seen markets fluctuate over recent months.

According to Juneja, it was mainly because of the comprehensive pricing strategy followed and the choice of investors who are on board with Swiggy’s long-term vision that saw success in their IPO. “We priced it right,” Juneja said.

“We had a high-quality book, a good balance between domestic and foreign investors, and people who really understood the story—not those looking to flip on day one but long-term holders.” This in itself, along with the decision of SoftBank not selling some share of the company due to its assimilation into the OFS, built confidence for future growth prospects of the food delivery platform.

In the same vein, Juneja mentioned that the IPO formed part of a more comprehensive strategy adopted by SoftBank to leverage growth in the digital economy in India, which still has tremendous growth potential. Relatedly, successful investment by SoftBank in Indian start-ups such as FirstCry and Ola Electric was seen as part of the company’s strategy for fuelling growth in emerging markets.

Investments in FirstCry and Ola Electric by SoftBank have already fetched considerable returns and FirstCry’s valuation now stands at an estimated $1.2 billion against its earlier valuation of $400 million, and the holding in Ola Electric has crossed $1 billion.

“As opportunities like Swiggy come along not so very often, we have been very keen to focus on India’s increasing urbanization, and the economic growth.Prosus too has given a satisfactory return,” said Juneja while pointing that Swiggy was well-positioned to cash in on India’s rising urbanisation and economic growth. Its key investor, Prosus also witnessed huge returns it made by investing in Swiggy. Prosus owns 31% after a $1.3 billion investment in Swiggy.

The valuation at present is $2.8 billion, so that means more than $2 billion returns. Ashutosh Sharma, Head of Growth Investments – India and Asia at Prosus, described the Swiggy IPO as a “landmark achievement” and a “milestone” for the company in India.

“Today’s listing is a landmark achievement for Swiggy and a milestone for Prosus in India, he said, adding that the investment and prospects it presents for coming years are of great importance to both the company and the investors.

Market Response and Industry Dynamics Swiggy’s IPO

A new precedent for the Indian food delivery industry has bee set, particularly in terms of competitive dynamics between Swiggy and its large rival, Zomato. One of the fiercest rivalries in India’s tech space, Swiggy and Zomato have been vying for dominance in this fast-growing space of online food delivery.

And on the day Swiggy listed its IPO, Zomato CEO Deepinder Goyal took to social media to congratulate his competitor which has had a successful listing.

“Congrats @swiggy! Couldn’t have asked for a better co in which to serve India,” Goyal posted on X, showing bonhomie towards Swiggy even in the midst of stiff competition. Zomato also tweeted, “You and I. In this beautiful world @Swiggy,” statement further indicating the enormous mutual respect and camaraderie between the two giants in the Indian food delivery space.

This was the first rare spectre of unity among competitors in India’s food tech industry-the wider world, however, now realized that there was something big in the country’s food delivery sector. Swiggy and other players are after a bigger share of the market. More public offerings are likely to be seen in the Indian tech sector. It even reflects increased maturity in the Indian startup ecosystem, where competitors acknowledge others’ success as well. Marking Success and Future Ambitions

The food delivery platform marked its historic listing through a special ad campaign focused on its journey over the last ten years.

The campaign reflects the company’s journey from being a little startup to the leader within the Indian food delivery space.

For this, the company took two of its delivery partners, Jigar Khan and Namrata Vora, and they accompanied Swiggy’s co-founders and the management team to ring the ceremonial bell at the National Stock Exchange (NSE). This was a symbolic way of paying respect to the delivery partners who are crucial to Swiggy’s growth.

Vision For Future 

Juneja remains upbeat regarding Swiggy’s future prospects as well. “It is a rare opportunity to stake a claim with something like Swiggy,” he said, referring to the firm’s deep penetration in both food delivery and grocery sectors, especially with Instamart, Swiggy’s grocery delivery service. “India is only getting richer, more urbanized… and the product-market fit is very strong. We think Swiggy has a long way to go.”

Juneja’s optimism comes from his belief that the story of the food delivery platform is still going great and its going to continue on an upward trajectory led by its organic growth in businesses and strategic foray in new categories.

It also vindicates the long-term vision of CEO Harsha Majety, whose leadership in figuring out this immensely competitive food delivery market has kept the company focused on sustainable growth. As Juneja said, “Harsha has always generated money for investors.

Throughout his tenure, he has managed to gain a lot of momentum and growth. He has focused more on sustainable growth rather than quick returns.” It has been this long-term value creation vision that has kept Swiggy ahead; other tech IPOs, such as Paytm, had fared poorly after listing. Swiggy’s Path Going Forward

Swiggy’s successful IPO presents a new milestone not only for the firm but also for the whole of the Indian startup ecosystem as a whole. Momentum gained from rock solid backing by global investors, such as SoftBank and Prosus, has enabled Swiggy to ride out market volatility and establish itself as a frontline player in the rapidly growing digital economy of India.

So, going forward, the ability of the company to attract long-term investors would really harden the nuts for other startups who are vying for public listings. In that respect, the food delivery platform’s IPO success turns out a sort of roadmap for other tech companies that are looking forward to public listing. With strong market demand, a solid business model, and clear pathways to growth, Swiggy is all set to be the most successful in the next few years.

However, the IPO has also given a new dimension to the landscape of Indian startups and helped highlight the power of long-term vision and strategic planning to create lasting value.