Swiggy IPO lists on exchanges with thin price gains. What this reveals
Swiggy made a muted debut by listing at a small premium of 8% over its issue price. After listing, Swiggy shares jumped 9% to Rs 449 on BSE, with its market capitalization crossing the Rs 1 lakh crore mark. The issue, which opened on November 6, was subscribed 3.6 times the shares on offer driven by institutional investors on the third and final day. Retail investors subscribed to their portion 1.14 times while the portion reserved for employees saw 1.65x bidding. Non-institutional investors, which include corporates and high net worth individuals (HNIs), bid for only 41% of the shares reserved for them.
Analysts had anticipated Swiggy's muted debut on the bourses as weakness in the broader market dampened appetite among individual investors for newly-listed companies. The grey market premium — the price in the unofficial market that investors pay for the unlisted shares before listing — was at Rs 2 for Swiggy on Tuesday, a 0.5% premium to the upper price band of Rs 390.
In a sector brimming with huge promise, but with growth speedbumps and rising competitive intensity, Swiggy straddles both hope and caution. The loss-making company which has doubled its revenue in the past two fiscals controls nearly 40% of market share in a near-duopoly where its bigger rival Zomato controls most of the rest. Analysts think Swiggy is a good long-term bet given its hold on the market with immense scope or growth. Zomato too was not profitable when it listed in 20121 but turned a corner later, pocketing major market gains. Many
