The price band for Swiggy’s IPO is considered attractively valued, according to a banker.

The price band for Swiggy’s IPO is considered attractively valued, according to a banker. Swiggy’s IPO price range of Rs 371 to Rs 390 is viewed as attractively valued, according to an investment banker at the IPO press conference. This range was determined by comparing financial ratios with a key competitor and factoring in qualitative aspects.

While Swiggy’s rival Zomato trades at a trailing P/E of 297x, Swiggy’s ratio stands at -35.23x. Despite this, Swiggy’s price range is higher than Zomato’s closing price of Rs 247 on October 30.

The Red Herring Prospectus (RHP) notes that Swiggy’s pre-IPO earnings per share (EPS) is calculated based on pre-issue shareholding and recent earnings for the fiscal year ending March 31, 2024.

Financially, Swiggy cut its losses for FY24 to Rs 2,350.2 crore, down from Rs 4,179.3 crore the previous year, with operating revenue rising 36 percent to Rs 11,247.4 crore from Rs 8,264.6 crore.

In Q1 FY25, Swiggy reported a loss of Rs 611 crore, slightly up from Rs 564 crore in the same quarter last year, while quarterly revenue grew by 35 percent to Rs 3,222.2 crore.

Swiggy plans to allocate its IPO proceeds as follows: Rs 1,343.5 crore will go towards investments in its subsidiary, Scootsy; Rs 703.4 crore will be used to enhance technology and cloud infrastructure; and Rs 1,115.3 crore will support brand marketing and business promotion.

Explaining the larger allocation for brand marketing, Swiggy’s CFO Rahul Bothra noted that additional tech expenses will not require new capital expenditures, as they are already covered by existing operating expenses.

India’s second-largest food delivery platform’s IPO will include a fresh equity issuance of Rs 4,499 crore, alongside an offer-for-sale (OFS) of 17.5 crore shares by existing shareholders, as detailed in the Red Herring Prospectus (RHP).

The fresh issuance was raised from an initially planned Rs 3,750 crore, while the OFS component was adjusted down from 18.5 crore shares, as indicated in the updated draft RHP filed on September 26.

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