New Delhi, November 4 (IANS). Industry experts and many brokerage firms have advised investors not to invest money in the IPO of food delivery company Swiggy. It has also been said that investors should wait until the financial performance and growth outlook of the company improves.
Swiggy’s IPO is opening for retail investors from November 6. The company plans to raise Rs 11,327.43 crore through public issue.
The Swiggy IPO comprises a fresh issue of 11.54 crore equity shares worth Rs 4,499 crore and an offer-for-sale (OFS) of 17.51 crore shares worth Rs 6,828.43 crore.
Samco Securities said in a note to investors that it would be more prudent for investors to wait until Swiggy shows better financial results and a clear path to sustainable growth.
The brokerage firm said Swiggy had posted a loss in FY24. The IPO appears to be over-valued considering Swiggy’s current financial position, market competition and valuation compared to its main rival Zomato, which recently turned profitable.
Swiggy had reported a net loss of Rs 2,350 crore in the last financial year. However, this was 44 per cent lower than the loss of Rs 4,179 crore in FY23. The company’s income has increased by 36 percent to Rs 11,247 crore in financial year 2024, which was Rs 8,265 crore last year.
According to brokerage firms, Swiggy has been posting continuous losses since its inception in 2014. The reason for this is high operational costs.
Bajaj Broking said in its note that the biggest risk in Swiggy’s business is tough competition from Zomato, Zepto and new companies coming into the market.
The broking firm further said that the biggest risk with Swiggy is that the company is dependent only on the top 50 cities of India for income. Swiggy is facing potential challenges due to changes in food delivery rules. In such a situation, investors should invest only keeping a long term perspective.
–IANS
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