The IPO market has seen some big changes recently. In the past, many investors saw IPOs as a way to quickly make money. However, in the last few months, IPOs have not been performing well, with many shares trading lower than their issue price. For example, Hyundai’s large IPO is currently trading over 7% lower than its issue price. Despite this, Swiggy, the popular food delivery app, has decided to go ahead with its own IPO, worth ₹11,327.43 crore. But how does this IPO compare to Zomato, a similar food delivery company, which has already become profitable and experienced steady growth? Let’s break it down and compare the two companies in more detail.
Swiggy vs Zomato
Swiggy is offering its IPO in two parts. The first part is a “fresh issue” where Swiggy will raise ₹4,499 crore by issuing new shares. The second part is an “offer-for-sale” (OFS) of ₹6,828.43 crore, where existing investors will sell their shares. In total, this IPO could value Swiggy at ₹11.3 billion. This is larger than Zomato’s IPO, which raised ₹9,375 crore in 2021. Zomato’s IPO included ₹9,000 crore in fresh issues and ₹375 crore in OFS.
However, there is a key difference between the two companies. While Zomato has become profitable and is showing strong year-on-year growth, Swiggy has not yet turned a profit. Swiggy recently announced a net loss of ₹2,350 crore for the year. This loss, however, is smaller than last year’s loss, showing that the company is improving. In comparison, Zomato reported a profit of ₹351 crore in FY24, proving that it is financially healthier than Swiggy at this stage.
Despite these financial challenges, Swiggy is focusing on new ideas to compete in the market. For example, the company recently launched “Bolt,” a service that promises to deliver certain food items in just ten minutes. This shows that Swiggy is serious about quick deliveries, which could help it compete with Zomato in this growing area of food delivery known as quick commerce.
Swiggy’s Market Share and Future Growth
Swiggy currently holds 45% of the food delivery market in India. However, it has a much smaller 25% share in quick commerce, which involves fast deliveries of products that don’t need much preparation. This smaller share in quick commerce could limit Swiggy’s growth in this segment, especially as the demand for quick deliveries increases.
On the other hand, Zomato has continued to grow steadily. The company has a market cap of over $25 billion, which means it is worth more than many other companies in the industry. Zomato has performed well since its IPO, with its stock price increasing by 285% in just two years. In fact, Zomato’s shares have surged more than 93% this year, showing that investors have confidence in the company’s future growth.
The Rivalry: Swiggy vs Zomato
The competition between Swiggy and Zomato is intense. Analysts believe that Zomato has the upper hand, with its larger market share, profitability, and steady growth. Zomato’s strong position in the food delivery market makes it the leader in this space, at least for now.
Swiggy, however, is not backing down. It has the potential to grow significantly with the money raised from its IPO. The key question is whether Swiggy can use this capital to catch up with Zomato and challenge its dominance in the food delivery industry.
What Does This Mean for the Future?
Swiggy’s IPO is an exciting development, but it is also just the beginning of a new chapter for the company. If successful, this IPO could make Swiggy a stronger competitor in the food delivery market and drive even more innovation. The competition between Swiggy and Zomato will likely lead to improvements in services, faster deliveries, and better offers for customers.
For consumers, this rivalry is great news. Healthy competition between the two companies could lead to better products and services at lower prices. It’s likely that both companies will keep pushing themselves to offer new features and improve their services, which will benefit everyone.
