By Reuters | Updated: November 13, 2024
Nov 13 (Reuters) – Shares of Indian food and grocery delivery firm Swiggy (SWIG.NS) rose 2.5% in their trading debut on Wednesday, after its $1.4 billion IPO last week, but pared initial gains on concerns about its path to profitability.
The stock listed at 420 rupees ($4.98) on India’s National Stock Exchange, compared to its issue price of 390 rupees, before giving up some gains in a broader market that slid after a spike in inflation dampened bets on interest rate cuts.[.BO]
The stock had jumped 7.7% in pre-open trade.
Swiggy’s debut stands in sharp contrast to rival Zomato’s (ZOMT.NS) blockbuster listing in 2021. Zomato shares have more than tripled since then.
Swiggy and Zomato dominate India’s food delivery market, with estimated market shares of 34% and 58%, respectively.
But while Swiggy has narrowed its annual losses, it has yet to turn a profit, whereas Zomato has already posted a fiscal 2024 profit after a loss the previous year.
“Despite a strong potential growth runway and an improving margin profile, we believe Swiggy still has a long and winding road to profitability,” said Macquarie Capital analysts who initiated coverage on the company with an “underperform” rating.
Macquarie has set a target price of 325 rupees on the stock, nearly 17% lower than Swiggy’s IPO price.
Swiggy’s IPO, India’s second-largest share sale this year, was oversubscribed by more than three times, helped over the line by institutional investors rushing in with orders on the final day of the sale.
($1 = 84.3990 Indian rupees)
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@ Thomson Reuters 2024
