India’s Swiggy tries enticing IPO bargain hunters
The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Refiles to add topic codes.
By Shritama Bose
MUMBAI, Sept 30 (Reuters Breakingviews) -A food delivery company is about to test the appetite of India's roaring stock market. SoftBank Group 9984.T and Prosus-backed PRX.AS startup Swiggy may target a valuation of up to $15 billion in its Mumbai initial public offering, Reuters reported last week, citing an unnamed source. It's losing money and is also smaller than its profitable, faster-growing rival, Zomato ZOMT.NS, per the prospectus that was made public on Thursday. But the bet is that it's improving enough to catch up.
The $29 billion Zomato has a larger user base and higher sales. It grew revenue from operations at nearly twice the rate Swiggy did during the 12 months to the end of March, which was also its first full year of profit.
Swiggy does at least seem to be pricing its stock-market debut accordingly. Its target valuation implies a multiple of 10 times forward sales, based on annualising first-quarter revenue. That’s a discount to Zomato’s 14 times multiple, using the same calculation.
Even so, the price of Swiggy shares in the private market has jumped 40% in the past two months. That's because local sports stars and Bollywood celebrities have piled in ahead of the initial public offer, website ETOnline reported on Thursday.
The upstart's financials are improving, though. Its food delivery segment generated earnings on an adjusted EBITDA basis during the three months to June, compared with a loss in the same period last year. Contribution margins are improving, too, in its quick commerce business, where Zomato got ahead via M&A. Swiggy does a better job of retaining app users than its rival, per a Bernstein analysis, even though Zomato’s larger user base dulls that edge.
Top shareholder Prosus, which wrote off its stake in what was once India's most valued startup, Byju’s, in June, is only selling a chunk of its affiliate's 31% position in the float. SoftBank, meanwhile, is keeping hold of its shares, having watched Zomato stock more than double since it sold its holdings in December.
Recent blockbuster IPOs have performed well, too. E-bike maker Ola Electric OLAE.NS and retailer Brainbees BRAE.NS are both trading around a thirdabove their offer price, even after losing some steam of late.
That, combined with a lower multiple than Zomato, makes Swiggy's IPO a decent bet for bargain hunters. The big question is whether India's booming market can stomach another big deal, or will get indigestion.
Follow @ShritamaBose on X
CONTEXT NEWS
Food and grocery delivery startup Swiggy on Sept. 26 filed updated papers for a Mumbai initial public offering. The company plans to raise up to $1.25 billion at a valuation of $15 billion, Reuters reported the same day, citing an unnamed source.
The offer will comprise fresh shares worth up to 37.5 billion rupees ($448 million) and the sale of up to 185.3 million existing shares, per the draft prospectus. Prosus, Accel India, Yuri Milner-backed Apoletto Asia and a Tencent fund are among the sellers. Kotak Mahindra Capital, Citi, Jefferies, Avendus, JPMorgan, Bank of America and ICICI Securities are advising Swiggy on the deal.
Graphic: Swiggy trails its listed rival on financial metrics https://reut.rs/3ZGxIjt
Editing by Antony Currie and Aditya Srivastav
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
