Patient investors may subscribe to Swiggy IPO
The IPO, which opens Wednesday and closes Friday, has been priced in the band of ₹371-390 per share. The grey market premium — the price in the unofficial market that investors pay for the shares before listing — was at ₹20 for Swiggy on Tuesday, a 5% premium to the upper price band of ₹390.
Analysts said weak market conditions have restricted investor appetite for the time being. «If the current market conditions persist, Swiggy could make limited listing day gains or list at par but, if market conditions improve post the volatility of US election outcome, then it could gain 10% to 15% on listing,» said Hemang Jani, director, Finazenn, an investment advisory.
Jani added that investors could gain around 25% to 30% return from a two to three-year view due to better valuations than Zomato though it's lagging its rival on most operating metrics.
Analysts said that Swiggy with a 40% market share is trading at six times estimated price-to-sales ratio while Zomato is with 60% market share is trading at 10 times. The company's decision to reduce the valuations in the IPO from $14 billion to $10.2 billion bodes well for the issue, they said.
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