• The company's financial health, including consistent annual net losses, is a concern for investors.
• Past IPOs, like Bajaj Housing Finance and Italian Edibles, have seen varied responses based on their financial standing.
• The tepid response to Swiggy's IPO highlights the importance of a strong financial foundation for companies planning to go public.

Swiggy, the renowned food delivery company, has been witnessing a lukewarm response from investors for its Initial Public Offering (IPO). The IPO, which opened on Wednesday, was subscribed only 12% on the first day. By the second day, the subscription had risen to 35%, a figure that still falls short of expectations. The IPO, worth Rs 11,327 crore, will close for bids on November 8.

The company has set the price band between Rs 371 and Rs 390. The shares will be listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on November 13, with the allotment of shares taking place on November 11.

Investor Response and Subscription Details

The subscription details as of 5 p.m. on the second day of bidding showed that qualified institutional buyers (QIBs) subscribed 28%, non-institutional investors (NIIs) portion saw 14%, retail individual investors (RIIs) portion was at 84%, and the employee portion was at 115%.

Swiggy's financial health has been a topic of concern for investors. The company has been reporting net losses annually since its inception. It relies heavily on third-party providers for various operational aspects, including payment gateways and supply chain management.

Financial Health and Market Concerns

In the past three fiscal years, Swiggy has consistently reported losses on both a standalone and consolidated basis. In FY 2021-22, the total revenue was Rs 6,119.78 crore, with a net loss of Rs 3,628.90 crore. The following year, FY 2022-23, saw an increase in total revenue to Rs 8714.45 crore, but the net loss also increased to Rs 4,179.31 crore.

In FY 2023-24, the total revenue rose further to Rs 11,634.35 crore, while the net loss was reduced to Rs 2,350.24 crore. In the June quarter of FY 2024-25, the company recorded a total revenue of Rs 3,310.11 crore and a net loss of Rs 611.01 crore. Bajaj Broking, a brokerage firm, stated, These figures indicate that the company has been experiencing continuous financial losses over the reported periods.

The IPO's tepid response is reminiscent of similar events in the past. For instance, in 2024, Bajaj Housing Finance made a solid market debut, ending with a huge premium of nearly 136% against the issue price of ₹70. The stock listed at ₹150 on the BSE and NSE, reflecting a jump of 114.28% from the issue price.

In contrast, Italian Edibles IPO made a weak debut on NSE SME, with shares listed at ₹55, which is 19.12% lower than the issue price of ₹68. Similarly, Innova Captab shares made a muted stock market debut, with shares listed at ₹456.10 apiece on the BSE, a premium of 1.81% to the issue price of ₹448.00 per share.