Swiggy IPO GMP indicates muted listing gains amid negative market sentiment

The initial public offering (IPO) of food delivery giant Swiggy is set against a backdrop of negative market sentiment, marked by concerns over an urban demand slowdown and foreign investor outflows affecting the domestic market.

The IPO of Swiggy, following a series of notable recent IPOs such as South Korean automaker Hyundai's massive Rs 28,000-crore issue, is generating considerable attention. However, the grey market premium (GMP) suggests a subdued listing performance.

Swiggy's GMP, currently at Rs 20-22, indicates a modest premium of 5.64 percent in the unofficial market, a slight improvement from last week's Rs 18, which reflected a 4.62 percent gain. These figures underscore the broader negative market sentiment, highlighted by the benchmark Sensex's significant drop of nearly 942 points to a three-month low and the Nifty slipping below the 24,000 mark on Monday.

The tepid market response is evident despite Swiggy's rapid expansion in quick commerce, now constituting 40 percent of its revenue. Swiggy aims to raise over Rs 11,000 crore through its IPO, with the public issue open for bidding from November 6 to November 8. The price band for the IPO is set at Rs 371-390 per share.

Swiggy's reduced estimated valuation of $11.3 billion, down 25 percent from an earlier $15 billion estimate, reflects cautious investor sentiment. Nevertheless, the IPO has attracted significant interest from big investors. According to Reuters, sources reveal that investors like Norway's sovereign wealth fund Norges and Fidelity have placed bids exceeding $15 billion, 25 times the $605-million portion reserved for such investors.

Despite these mixed signals, Swiggy's growth trajectory appears promising, drawing parallels with peer Zomato.

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