StartupTalky

Tag: Swiggy and Zomato

  • INR 5,085 Crore is Raised by Swiggy from Anchor Investors

    More than 75 anchor investors have contributed about INR 5,085 crore (about $600 million) to Swiggy, one of the top food and grocery delivery services in India. The Bengaluru-based business, which rivals Zomato, which is run by Deepinder Goyal, revealed the investment in a stock exchange filing on 5 November 2024.

    Specifications of the IPO: Scale and Composition

    The INR 11,327.43 crore Swiggy IPO consists of a primary issuance as well as a secondary offering by current shareholders. The secondary offering, also known as the Offer for Sale (OFS), is worth INR 6,828 crore, while the primary issue, or fresh money raise, is worth INR 4,499 crore.

    Second only to Zomato’s public debut in 2021, this IPO is anticipated to be among the biggest in India this year and among the largest in the food technology sector. Swiggy wants to be valued at INR 87,300 crore ($11.3 billion), which is at the upper end of the pricing range of INR 371-390.

    Important Investors and Allocation Information

    Swiggy’s anchor segment has been supported by a wide range of domestic and foreign investors, with a sizable percentage of the shares going to Indian institutions. SBI Mutual Fund, Kotak Mutual Fund, HDFC Life, and Axis Mutual Fund are examples of domestic investors.

    By indicating strong institutional backing, the anchor allocations are intended to stabilise the IPO and perhaps draw in more retail and non-institutional investors.

    Evaluation and Financial Performance

    Swiggy has prioritised expansion, as seen by its most recent financial reports, which show notable advancements. Swiggy reported revenue of INR 11,247 crore for FY24, up 36% from INR 8,265 crore for FY23.

    In comparison to the prior fiscal year, losses also significantly decreased, falling 44% to Rs 2,350 crore. The business’s future growth, especially in its network of dark stores, as well as investments in marketing, technology, and possible acquisitions, will be financed by the IPO proceeds from the main issue.

    In an attempt to fortify its position against its main rival, Zomato, which has a market worth of INR 2.1 trillion, or INR 2.18 lakh crore (as of November 6, 2024), Swiggy has entered the public market.

    Current Anchor Book Investors

    Notable international investors that have made anchor book investments in the company include New World Fund, Fidelity, Omnis Portfolio Investments, Nomura, Government Pension Fund Global, PGGM World Equity, Blackrock, Carmignac, Eastspring Investments, Citigroup, TOCU Europe, Integrated Core Strategies, CLSA, Matthews Asia Funds, and Societe Generale.

    ICICI Prudential Mutual Fund, Kotak Mahindra AMC, SBI Mutual Fund, Axis Mutual Fund, Aditya Birla Sun Life Trustee, 360 ONE, Mirae Asset, Nippon Life India, Bandhan Mutual Fund, Invesco India, Motilal Oswal Mutual Fund, Sundaram MF, Tata MF, UTI Mutual Fund, DSP India Fund, Ashoka Whiteoak, Baroda PNB Paribas, Helios MF, and Avendus were among the domestic institutional investors that took part in the anchor book.

    Zomato CEO Clarifies ‘Future Packing Date’ on Button Mushrooms
    Zomato’s CEO addresses consumer concerns over button mushrooms labeled with a ‘future packing date,’ providing clarity on the labeling issue.
    StartupTalkyNitin Konde

  • Before Diwali Celebrations, Swiggy and Zomato have Raised Their Platform Fees to INR 10

    According to various reports, food delivery firm Zomato raised its platform charge by almost 43% before Diwali celebrations, from INR 7 to INR 10 per order, in order to “keep Zomato running” and preserve services during the holiday season. Similarly another media report cited that Swiggy, another major competitor in the sector, also raised its fee to INR 10. The current charge for these platforms is 400% higher than the INR 2 per order platform fee that was first implemented in August 2023.

    In places like Delhi and Bengaluru, Zomato raised their platform cost by 20% earlier in July, from INR 5 to INR 6 per order. According to Zomato’s annual report for the fiscal year 2022–2023, 647 million orders were placed overall. According to a rough estimate, the business may make an additional INR 5.7 million a day if the platform raise were implemented nationwide.

    Food Lovers Express Their Disappointment at X

    During the holiday rush, Zomato and Swiggy raised their platform fees, which infuriated foodies. Although the move to raise the platform charge did not sit well with users, the nation’s two largest food delivery apps are aiming to profit from an increase in orders during the holiday season.

    The updated platform charge was the subject of debate on social networking site X. Ordering in has become too costly to be sustainable, as noted by several X users, and meal delivery fees have been steadily rising. 

    In August 2023, Zomato started charging INR 2 per order as a platform charge. Zomato increased the platform fee to INR 4 per order by January 2024. At the moment, each order costs INR 10. All users, including Gold members, are subject to the platform fee, which is in addition to Zomato’s delivery fee.

    The Platform Fee Does Not Have a Set Formula

    Zomato’s Chief Financial Officer, Akshant Goyal, stated during the company’s first quarter earnings call for FY25 that the platform charge is being changed “step by step” in order to determine how sensitive customers are to price adjustments. There is no set formula for the platform fee, Goyal had stated at the time, in reference to the likelihood of greater fees on days when there are more orders.

    Zomato’s Current Financial Performance

    On October 22, Zomato, headed by Deepinder Goyal, released its September quarter results. The company’s operating revenue increased 68% year over year to INR 4,799 crore. The fastest-growing quick commerce sector was the main driver of the total growth, although Zomato’s biggest source of income and profits, the meal delivery company, had a 21% increase in gross order value year over year to INR 9,690 crore.

    Because it was a seasonally bad quarter, Zomato’s food delivery company saw take rates drop sequentially by 20 basis points to 24.1% during the July–September period. According to industry observers, there is little chance that the rise in platform fees imposed by food delivery businesses will affect customer behaviour. According to Zomato’s fiscal 2024 annual report, platform fees brought in INR 83 crore for the company.

    Swiggy Founder Sriharsha Majety Receives $271M in Esops Pre-IPO
    Swiggy grants stock options to founder Sriharsha Majety as part of its latest compensation plan, preparing for a strong leadership ahead of its IPO.
    StartupTalkyNitin Konde