Swiggy, the renowned food delivery platform, recently made its debut on the Indian stock market, stirring up considerable excitement among investors. However, the early trading volatility has revealed a sense of caution among investors, as the company continues to grapple with persistent losses. The company's shares opened at Rs 420 per share on the National Stock Exchange (NSE), a 7.7 per cent premium over its Initial Public Offering (IPO) price of Rs 390. By the end of the trading day, the shares had settled almost 17 per cent higher at Rs 456 apiece on the NSE.

This performance was better than expected, considering the moderate subscription of 3.59 times and the initial muted investor response reflected in the low grey market premium. Despite the positive listing, market watchers have expressed concerns about Swiggy's financial health. The company has consistently reported losses on both a standalone and consolidated basis over the past three fiscal years. In FY 2021-22, the total revenue was Rs 6,119.78 crore, with a net loss of Rs 3,628.90 crore.

Swiggy's Financial Health and Investor Sentiment

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. These figures indicate that the company has been experiencing continuous financial losses over the reported periods. Swiggy is yet to post quarterly results for Q2 FY25.

Despite these challenges, there is optimism about Swiggy's potential to capture further market share in India's evolving food delivery and quick commerce segments. The company has shown impressive growth potential, yet the road to profitability may be bumpy. Investors may need to brace for a dynamic journey as the company seeks to balance expansion with sustainable financial performance. Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, advised that allotted investors can hold it for the long term despite knowing short term volatility and competitive pressures in the sector.

Market Conditions and Investor Advice

For non-allottees, he advised to wait and watch for the price to settle and revisit to buy near the issue price if we get due to market selloff pressure. The listing of Swiggy comes at a time when the domestic equity market indices have been under pressure for the fifth consecutive session, with the Sensex and the Nifty plunging over 1.2 per cent on persistent selling by foreign institutional investors (FIIs), concerns over higher inflation and on profit booking at higher levels. The correction reflects investors' growing caution amid rich valuations and macroeconomic uncertainties, with both Nifty and Sensex falling to their respective five-month lows.

The listing also comes amid a broader market selloff, with Indian equity benchmarks taking a sharp beating, extending their fall for the fifth straight session. This has further impacted investor sentiment, dashing hopes for a near-term rate cut by the RBI. Despite the challenges, some investors have reaped significant profits from Swiggy's IPO. According to the company's draft red herring prospectus (DRHP), Prosus invested nearly Rs 9,055 crore ($1.07 billion) in the online food platform and made Rs 26,927 crore ($3.2 billion) in IPO, thus netting a $2.12 billion profit from its investment. On the other hand, Chinese behemoth Tencent infused Rs 1,343 crore and made Rs 3,166 crore, making more than 135 per cent profit (on the issue price of Rs 390).