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March 29, 2024

Swiggy Faces $200 Million Loss Ahead of IPO Amidst Stock Market Surge

Amidst plans to debut on the stock market, Swiggy, the prominent Indian food delivery giant, has disclosed a $200 million loss for the nine months leading up to December 2023, as revealed in an internal document. The company, backed by SoftBank, is gearing up for a potential initial public offering (IPO), aiming to join India’s booming stock market.

Reports from sources, previously disclosed to Reuters, suggest that Swiggy could make its stock market debut by the close of this year. However, both domestic and foreign investors have become increasingly cautious about Indian startup IPOs, given concerns over potentially inflated valuations of companies still grappling with losses.

According to the document, for the fiscal year 2022-23, Swiggy incurred a loss of 41.8 billion rupees ($500 million). Nonetheless, the company is anticipated to curtail losses for the full year of 2023-24, owing to reduced wage payouts and cuts in marketing expenditure, as revealed by a source familiar with the matter who opted to remain anonymous.

The document further indicates that Swiggy reported losses amounting to 17.3 billion rupees ($207 million) during the first nine months of the fiscal year 2023-24, from April to December 2023. This loss was juxtaposed against a revenue of $1.02 billion during the same period, as compared to the fiscal year 2022-23 revenue of $1.05 billion.

Despite requests for comment, Swiggy remained unresponsive to queries.

As India’s stock market experiences a robust 28% surge over the past year, numerous companies are contemplating listings; however, they face scrutiny from discerning investors.

A case in point is the digital payments firm, Paytm, which continues to grapple with losses. Since its listing in 2021, Paytm has witnessed an 80% drop in its share value, drawing criticism from analysts for overvaluing itself during the IPO.

Similarly, Swiggy’s competitor, Zomato, witnessed a decline in its shares post its 2021 listing. However, this year, the shares have rallied by 45% following two consecutive quarterly profits.

Previously valued at $10.7 billion by investors in 2022, Swiggy initially ventured into meal deliveries and gradually expanded its services to include grocery deliveries and restaurant bookings.

In conclusion, Swiggy’s financial performance ahead of its IPO reflects both challenges and opportunities amidst the dynamic landscape of the Indian stock market, where investor sentiment remains cautious yet optimistic towards emerging startups.

Jhumpa Lahiri

Jhumpa Lahiri

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