Swiggy is an Indian food delivery company backed by SoftBank Group, is preparing to raise $800 million at least through an IPO early next year, reported the Nikkei on Tuesday, citing people familiar with the matter.
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Swiggy wants to position itself as a logistics company
Swiggy is planning to position itself as a logistics company in addition to their current position as a food delivery service. For this reason, Swiggy has been adding more independent directors to it’s board. Swiggy has actually doubled its valuation to $10.7 billion in their latest funding round.
The rival company Zomato Ltd. had an amazing market debut last night, but the company struggles to keep this trend going. The company reported a very lukewarm growth in the third quarter.
The shares of many promising Indian startups, such as Paytm, Zomato, Policybazaar and Nykaa, have fallen significantly. These startups were even listed in last year’s fanfare. Zomato’s shares have gone down by 41 percent since 1st October and Paytm’s shares are trading at less than half their last list price of 1,950 rupees per share. Nykaa’s shares have fallen by 33 percent from its list price while Policybazaar’s shares have fallen by 36 percent.
In such an environment, Swiggy is going to be under immense pressure to tell a good equity story that will attract investors.
Swiggy and Zomato are not profitable yet
While the gross sales of food delivery companies Zomato and Swiggy have increased over the years, Swiggy and Zomato are still not profitable. Zomato’s losses for the October-December period stood at 3.83 billion rupees ($52 million) before taxes and exceptional items. Swiggy reported losses of 13.14 billion rupees in the financial year that ended in March 2021.
Swiggy’s grocery delivery service Instamart
Swiggy has a grocery delivery service called Instamart which is now competing with companies like Blinkit and Zepto. The company is attracting more customers with their policy of 10 minute deliveries.
The service was launched in August 2020. It is expected that the service is going to use up almost everything from the $700 million raised in January. The projected gross sales of this service will be over $100 million a month by this September.