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Can Swiggy Replicate Zomatoโ€™s Success On The Bourses?

Inc42Inc42 ยท 9m ago
Can Swiggy Replicate Zomatoโ€™s Success On The Bourses?
Medial

- Swiggy's IPO is one of the most anticipated IPOs in the Indian startup ecosystem and public market. - Public market investors are attracted to Swiggy due to the company's potential in the food delivery and quick commerce sectors. - Swiggy's quick commerce business has shown significant growth, with a FY24 Gross Order Value (GOV) of INR 8,068.6 Cr, up over 57% YoY. - While a direct comparison between Swiggy and Zomato is necessary, investors see the potential in Swiggy's quick commerce business. - Investors should consider Swiggy and Zomato as startup investments, understanding that there may be ups and downs in terms of profitability. - Swiggy's unlisted shares are currently trading at INR 485-INR 515 in the grey market. However, concerns about high valuation and losses on the books remain.

IPO Prep: Swiggy paints a healthy financial picture in first 9 months of FY24

EntrackrEntrackr ยท 1y ago
IPO Prep: Swiggy paints a healthy financial picture in first 9 months of FY24
Medial

A decade after launching, foodtech and quick commerce decacorn Swiggy is eyeing a public listing this year and is leaving no stone unturned to present a healthy financial picture. The company seems to be achieving a steady 25-30% year-on-year growth in the ongoing fiscal year (FY24). During the first nine months of FY24, IPO-bound Swiggyโ€™s revenue from operations was Rs 5,476 crore, according to a document drafted by an investment banker on behalf of Swiggy. While the company reported Rs 8,265 crore in revenue in FY23, the document revealed it did a collection of Rs 6,623 crore in the last fiscal year, it appears Swiggy changed its revenue recognition method. Within this, the food delivery business constituted 82.65% of the total operating revenue, amounting to Rs 4,526 crore. The remaining income came from Swiggy Instamart, the firmโ€™s quick commerce vertical. Sources indicate that the company is exploring a secondary market deal as it wants to offer exits to its early as well as late-stage backers. โ€œSwiggy is likely to go for an IPO in the second half of this year and the secondary transaction appears to be an attempt to spruce up its cap table,โ€ said one of the sources requesting anonymity. Sources outline that Swiggy will be seeking its last primary valuation in the potential secondary transaction. โ€œThe company closed Rs 384 crore from Ramco Group in August at a valuation of Rs 73,520 crore [$8.85 billion],โ€ mentioned the document, cited above. Just months after this funding, US-based assets manager Baron Capital Group marked up the valuation of Swiggy to $12.1 billion. Itโ€™s worth noting that Swiggy acquired Lynk Logistics around the same time (August 2023) and the above transaction might be linked to it. Queries sent to Swiggy didnโ€™t elicit any response. The document further stated that during the first nine months of FY24, Swiggyโ€™s gross order value (GOV) stood at Rs 24,230 crore, with food delivery comprising a substantial 76.2%, equivalent to Rs 18,472 crore. The remaining GOV is attributed to Instamart. With a sharp focus on profitability, the Bengaluru-based company has significantly improved its EBITDA margins which registered at -1.9% and -109.5% for the food delivery biz and Instamart, respectively during the nine-month period. These figures stood at -17.5% and -259% in FY23. Swiggyโ€™s cost-cutting measures and IPO preparations have been evident. In January, Entrackr reported that Swiggy was planning to lay off 6% of their workforce to trim expenses. In February month, the company changed its registered name from Bundl to Swiggy and recently shortlisted seven bankers including Kotak Mahindra and JP Morgan. โ€œSwiggy will file papers for IPO by May and ultimately go IPO around the festive season. The company will seek valuation in the range of $12-15 billion,โ€ said another source who also requested anonymity. This person also said that the firm may give a discount in valuation as far as secondary transaction is concerned. The timing seems good, with closest peer Zomato doing well since its listing to approach a $20 billion valuation this week. Even after factoring in the lead for Zomato in topline, a $12 billion valuation or even higher should not be out of reach for Swiggy after it files its FY24 financials. However, it is clear that factors like market dynamics at the time of the IPO, the share of offer for sale versus funds for the firm, or the plans of Big Basket or even Zepto will likely impact perceptions on future profitability. Even as Zomato has achieved operational profitability, Swiggy was some way off when it last announced numbers, and that red ink is bound to weigh heavily on its price unless a turnaround is visible and sustained.

Prosus 2024 report card: Byjuโ€™s write-off, Swiggy and PayU growth

EntrackrEntrackr ยท 1y ago
Prosus 2024 report card: Byjuโ€™s write-off, Swiggy and PayU growth
Medial

Prosus, (formerly Naspers) has published its 2024 annual report which includes its Indian portfolio companies. While the company wrote-off its investment in Byjuโ€™s, the South African investment conglomerate also offered performance of its bet in India. Fintrackr has analyzed the report to decode insights and nuggets into the Prosusโ€™ portfolio which invested $8-9 billion in the country since 2018. Letโ€™s start with Byjuโ€™s which is staring at bankruptcy. [Byjuโ€™s] During FY24, the investor wrote off its 9.6% stake in Byjuโ€™s, amounting to an investment of $493 million, due to a significant decline in the edtech giantโ€™s equity value. Theyโ€™d done the same with Zest Money in FY2023: wrote off their substantial 19.4% stake. [Swiggy] Prosus holds a 32.6% stake in Swiggy (excluding ESOP) which is set to make its public debut in the coming months. According to the report, the food delivery and quick commerce firmโ€™s revenue from operations increased by 24%, driven by a 26% rise in its gross order value during the fiscal year ending March 2024. While the investor didnโ€™t give revenue numbers, per our calculation, Swiggy ended FY24 with Rs 10,695 crore revenue in the fiscal year ending March 2024. Supported by a fleet of around 3,87,000 active delivery partners, Swiggyโ€™s user base reached 104 million, according to the report. Its food delivery biz grew in double digits while the other revenue streams including restaurant advertising and platform fees helped Swiggy improve its operational profitability, the report added. Prosus also added a positive note to Swiggyโ€™s quick commerce segment (Instamart) as its GOV increased with improved unit economics. Read: IPO Prep-Swiggy paints a healthy financial picture in the first 9 months of FY24, for more details. [PayU] Prosus operates and owns PayU (a subsidiary of Prosus) which reported a 22% year-on-year growth on a consolidated basis to $1.1 billion in FY24. PayUโ€™s core payment gateway biz formed 88% of its overall collection which increased 23% to $975 million while the firmโ€™s TPV (total payment value) spiked 22% in the previous fiscal year. According to the report, India is the largest market for its PSP business contributing 46% of core PSP revenue and 60% of TPV. Despite not being able to onboard new customers in FY24, this business grew 11% to $444 million in the said fiscal year. PayUโ€™s India BNPL and personal credit revenue grew 29% to $107 million while the losses for this segment increased to $20 million followed by continuous investment in building the merchant lending portfolio, as per the report. PayU received in-principle authorization from the Reserve Bank of India (RBI) on 23 April 2024 to operate as a payment aggregator. The Gurugram-based firm also began onboarding new merchants.

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