SoftBank-backed Swiggy's shares ended nearly 17% higher in their trading debut in India on Wednesday, signalling growing investor confidence in food and grocery delivery firms as shoppers increasingly go online and want fast deliveries.
Swiggy's shares bucked a sharp selloff in the broader Indian markets and recorded a better first-day performance than some analysts had predicted for the loss-making firm after its $1.4 billion IPO - the country's second biggest this year.
The stock closed at 456 rupees ($5.41) on India's National Stock Exchange, giving the company a valuation of nearly $12.1 billion. It touched a high of 465.8 rupees earlier in the session.
Swiggy and its main rival Zomato are riding a wave of new shoppers in India by offering so-called "quick commerce" grocery deliveries within 10 minutes, diversifying from their main food delivery businesses.
The boom in quick commerce sales has hurt supermarket revenues and forced players including Mukesh Ambani, Asia's richest man, to launch a faster delivery service from his retail stores in India.
Swiggy's quick commerce service Instamart has seen "explosive growth," Anand Kripalu, a board member, said at the listing ceremony at the National Stock Exchange in Mumbai.
Dutch tech investor Prosus, which owns 25% of Swiggy, said on Wednesday it had made $2 billion on its investment in the company. SoftBank holds a roughly 8% stake.
The listing comes as Swiggy and Zomato face antitrust scrutiny over potential breach of competition laws in the food delivery business and calls from retail groups that their quick commerce business be investigated for alleged predatory pricing.
Profitability, competition concerns
Swiggy's IPO was oversubscribed by more than three-fold last week, helped over the line by institutional investors rushing in with orders on the final day of the sale.
Swiggy's debut still pales in comparison with Zomato's blockbuster listing in 2021. Zomato shares have more than tripled since then.
But while Swiggy has narrowed its annual losses, it has yet to turn a profit, whereas Zomato posted a fiscal 2024 profit after a loss the previous year.
"The company's continued losses and the challenging market conditions may temper investor enthusiasm in the long term," Shivani Nyati, head of wealth at Swastika Investmart.
Macquarie Capital estimates Swiggy's food order values in 2024-25 will be $3.3 billion, roughly 25% below Zomato's.
In the quick commerce sector, nationwide annual sales are set to exceed $6 billion this year, with Zomato's Blinkit having a nearly 40% market share, while Swiggy has around 30%, research firm Datum Intelligence estimates.