Grey Market Premium Signals Cautious Optimism
Swiggy’s upcoming IPO, set for debut on Wednesday, is generating mixed sentiments among investors. With a grey market premium (GMP) of just Rs 2, indicating a modest gain of 0.51% above the issue price, expectations for retail investors remain subdued. This suggests that the listing may not yield substantial profits for those participating in the IPO.
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Employee ESOPs: A Significant Upside
While retail investors may face limited gains, Swiggy’s IPO is expected to create substantial wealth for employees holding Employee Stock Ownership Plans (ESOPs). Approximately 5,000 current and former employees stand to benefit from an estimated Rs 9,000 crore in wealth generation. Notably, around 500 employees are projected to join the ‘crorepati’ club following the listing, highlighting the significant impact of the stock options.
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Top Management’s Stake in Success
The founders and senior management of Swiggy hold considerable ESOPs from the recent stock plan, which includes Group CEO Sriharsha Majety and co-founders Nandan Reddy and Phani Kishan Addepalli. Their substantial stakes reflect confidence in the company’s future performance, even amid current losses.
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IPO Overview: Subscription Performance
The Swiggy IPO aims to raise Rs 11,327 crore, with a price band set between Rs 371-390 per share. The response has been varied; while the retail segment was subscribed 1.14 times, institutional investors showed strong interest, with the Qualified Institutional Buyer (QIB) portion oversubscribed more than six times. This disparity indicates a robust belief in Swiggy’s potential among institutional players.
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Growth Amidst Losses
Founded in 2014, Swiggy has established itself as a major player in India’s food delivery market, partnering with over 200,000 restaurants and competing against heavyweights like Zomato and Amazon. Despite reporting a loss of Rs 2,350 crore in FY2024, the company’s growth trajectory suggests potential for future profitability in a competitive landscape.
