Swiggy IPO: From issue details, selling shareholders to risks, here are 10 things to know from updated DRHP

As food and grocery delivery company Swiggy gears up to launch one of the most anticipated initial public offerings (IPOs) in recent times, a look into the Updated Draft Red Herring Prospectus (UDRHP) reveals ten important pieces of information regarding the Rs 10,000-crore public issue.

Here’s what you need to know:
About Swiggy IPO

The public issue of Swiggy will consist of a combination of fresh shares and an offer for sale (OFS). The fresh issue is valued at Rs 3,750 crore, while the OFS comprises up to 1.85 crore shares. Swiggy has called an Extraordinary General Meeting (EGM) to increase this to Rs 5,000 crore or $600 million.

About Swiggy
The company started its operations in 2014 as a food delivery service and has since launched multiple services on its platform, including quick commerce in 2020, Dineout in 2022, and a pick-up/drop-off service called Genie in 2020. It also engages in other hyperlocal commerce through Swiggy Minis.

Swiggy Promoter
According to SEBI regulations, there is no identifiable promoter. The company’s CEO and Founder, Sriharsha Majety, holds a 6.23% stake, while co-founder Lakshmi Nandan Reddy Obul holds 1.62%. As of the filing date of this UDRHP, the company has 5,232 holders of equity shares and 1,187 holders of Compulsorily Convertible Preference Shares (CCPS).

Swiggy Selling Shareholders
The updated DRHP lists ten corporate selling shareholders, including Accel India IV (Mauritius), Apoletto Asia, Alpha Wave Ventures, LP, Coatue PE Asia XI LLC, DST EuroAsia V B.V, Elevation Capital V, Inspired Elite Investments, MIH India Food Holdings, Norwest Venture Partners VIIA-Mauritius, and Tencent Cloud Europe B.V. Individual selling shareholders include Lakshmi Nandan Reddy Obul, P.R. Venketrama Raja, Rahul Jaimini, Samina Hamied, and Sriharsha Majety.Swiggy Lead Managers
The book-running lead managers (BRLM) for the IPO are Kotak Mahindra Capital Company, Citigroup Global Markets India Private Limited, Jefferies India Private Limited, and Avendus Capital Private Limited, while Link Intime India Private Limited serves as the registrar to the issue.

Swiggy IPO’s Objectives of Offer
The UDRHP outlines five objectives for the offer. The company plans to allocate up to Rs 137.41 crore for investments in its material subsidiary, Scootsy, aimed at repaying or pre-paying borrowings. An investment of Rs 982.40 crore in Scootsy will focus on expanding its Dark Store network for the Quick Commerce segment and making lease/license payments for these stores. Of the net proceeds from the issue, Rs 586.20 crore will be allocated to technology and cloud infrastructure, and Rs 929.50 crore will go towards brand marketing and business promotion to enhance platform visibility. The company intends to deploy the net proceeds over four fiscal years, from FY2025 to FY2028.

Swiggy Financials
The company has incurred net losses each year since its incorporation, with negative cash flows from operations. For the financial year ending March 31, Swiggy reported losses of Rs 2,350.24 crore, down from Rs 4,179.30 crore in FY23 and Rs 3,628.89 crore in FY22. Revenue from operations for the same period was Rs 11,247.39 crore, compared to Rs 8,264.59 crore and Rs 5,704.89 crore in the previous years.

Swiggy vs. Zomato: Accounting Ratios
For FY24, Swiggy’s revenue from operations was Rs 11,247.39 crore, compared to Rs 12,114 crore for Zomato. Swiggy’s EPS on a diluted basis was (Rs 10.70), while Zomato reported Rs 0.41. Swiggy’s NAV per share stands at Rs 35.48, compared to Rs 23.14 for Zomato.

Risks to the Company
Failure to generate adequate revenue growth and manage expenses and cash flows could lead to continued significant losses.

Inability to retain existing users or acquire new users cost-effectively may adversely affect business and financial conditions.

Attracting and retaining delivery partners is critical; failure to do so could negatively impact business operations.

Retaining existing restaurant, merchant, and brand partners, or acquiring new ones, is essential for operational stability.

Increased operating costs passed on to users could lead to a decline in order volumes.

Effective management of Dark Stores is crucial for the quick commerce business.

Pending Litigations
There are certain legal proceedings involving the company, its subsidiaries, and certain directors pending at various levels before courts, tribunals, and authorities. Adverse rulings may require the company to make payments or provisions for future payments.

Attrition
The overall voluntary employee attrition rates for FY24, FY23, and FY22 were 34.56%, 33.14%, and 32.69%, respectively.

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