Swiggy IPO Faces Caution Amid Financial Losses and Market Volatility

Market skepticism surrounds the IPO of Swiggy after its unlisted shares had been trading in the grey market at Rs 8 as against their previous average premium of Rs 20. The much-awaited listing will happen in a critical time when sellers are showing their dominance by creating much selling pressure on the secondary market, raising little to no optimism amongst investors in terms of new listings for this period.

While analysts are generally advising a 'subscription for the long term' approach, some caution that Swiggy's loss-making status in a highly competitive market may deter potential investors. Swiggy continues to operate at a loss as of fiscal year 2024, whereas its competitor, Zomato, has recently turned profitable.

SAMCO Securities has stated that the IPO of Swiggy looks overvalued as the financial position and market risks are a cause of concern. The firm has cautioned investors to avoid the IPO till Swiggy's financial performance and growth prospects are on the mend. Swiggy has been consistently reporting losses for the past three fiscal years. For FY22, the total income of the company stood at Rs 6,119.78 crore while net loss was at Rs 3,628.90 crore. In FY23, though it posted total income Rs 8,714.45 crores, deepened a net loss Rs 4,179.31 crore. For FY24, again the company posts total income Rs 11,634.35, though now with a reduction in loss at Rs 2,350.24 crore of net loss only.

Despite all these, Bajaj Broking analysts are of the opinion that long-term investors can subscribe to the IPO. They found out that Swiggy had reported average earnings per share of Rs -14.90 and average return on net worth (RoNW) of -35.39% during the last three fiscal years.