Indian food delivery firm Swiggy rose nearly 17 percent on its market debut Wednesday after raising $1.34 billion in the country’s second-biggest IPO this year, as investor optimism offset profit concerns.
A booming stock market in the world’s fifth-largest economy has stoked an IPO frenzy over the past two years, with start-ups and established companies alike raking in billions of dollars at rich valuations.
Swiggy, which is backed by Japan’s SoftBank and investment giant Prosus, has pushed the limits of rapid commerce in India, with the help of a network of local warehouses and tens of thousands of delivery riders.
The tech firm, like many of its rivals, has expanded beyond traditional food delivery business into having everything from groceries to electronics dropped off at doorsteps in under 20 minutes.
Group chief executive Sriharsha Majety, speaking at the listing ceremony in the financial capital Mumbai, said India had “so much economic growth” ahead, and that “growth is obviously going to show up in the cities” — a boost for firms like Swiggy.
The company’s shares defied an overall weak market and closed at 456 rupees($5.4), 16.9 percent higher than the issue price, on their first day of trade.
In the run-up to the listing, analysts had raised concerns over stiff competition from industry leader Zomato and unlisted rival Zepto.
“Swiggy’s initial focus on in-house innovation gave it an edge, but competitors like Zomato and Zepto have since overtaken it in food delivery and quick commerce,” Ninad Sarpotdar, an analyst at Aditya Birla Capital, wrote in a pre-listing note.
Sarpotdar said that ongoing losses and a “slightly high valuation” were also negative factors.
Swiggy’s financial filings show its losses increased to 6.1 billion rupees ($72.3 million) in the June quarter.
The delivery app plans to use $66 million from its IPO proceeds to expand its warehouse network as it looks to boost revenue and cut losses.
