Swiggy stock closes 10% higher on bourses

Shares of Swiggy closed 10.48% higher at Rs 464 a piece on NSE on Wednesday as the food delivery and quick commerce firm marked a strong public debut on domestic bourses. 

On the BSE, shares of Sriharsha Majety-led company saw a 10.67% increase from its opening price.  

Shares opened at Rs 420 apiece on NSE on Wednesday, a near 8% premium on the upper band of the company's IPO of Rs 390 apiece.

Swiggy aims to raise approximately Rs 11,700 crore to invest in its subsidiary Scootsy, reduce company debt, and expand its dark store network. The funds will also be used to enhance technology capabilities and strengthen brand-building initiatives.

Swiggy's IPO was oversubscribed 3.59 times by the end of the book-building process on Friday, largely driven by strong demand from qualified institutional buyers (QIBs). QIBs alone oversubscribed the issue 6.02 times by the third day, following a slow start in the first two days.

However, demand from high-net-worth individuals (HNIs) and retail investors was relatively subdued. The HNI portion was subscribed 41%, while the retail portion was over subscribed by just 1.14 times.

JM Financial has initiated with a 'BUY' rating on the company with a target price of Rs 470, citing it has the fastest growing consumption plays with multiple levers to move towards sustainable margins.

"We, therefore, believe Instamart should see exponential expansion in the medium term, despite execution challenges in the past. The nature of the business is also such that when operating at scale there is immense operating leverage available, which, in turn, should help the segment turn self-sustainable," noted JM Financial Institutional Securities in a report dated Nov 13.

Swiggy, which competes with Zomato on the quick commerce and food delivery front, is set to announce its second quarter results soon. Investors and analysts will keenly look at average order value and dark store network expansion for Swiggy, profitability in its food delivery business, and monthly transacting users on the platform.

"While on an absolute basis Swiggy offers decent upside, we would prefer Zomato if asked to pick only one due to its superior execution in the past and market leadership across key segments," noted the brokerage.

(The copy has been updated with brokerage comments.)