Are You Investing In Swiggy IPO? Bjaja Broking Has An Advice for You

As Swiggy gears up for its highly anticipated initial public offering (IPO), Bajaj Broking has issued a cautious note for investors. While recommending a "Subscribe for Long Term" rating, the brokerage firm highlights concerns regarding the company's lofty valuation and persistent losses, despite impressive revenue growth.

Here TICE brings you details from the cautionary warning of Bajaj Broking on Swiggy IPO.

Swiggy IPO

Swiggy's IPO, priced between ₹371 and ₹390 per share, aims to raise capital for technology upgrades, brand building, and expansion of its quick commerce operations, including the establishment of new dark stores. The company has undeniably made significant strides in the Indian food delivery market, reporting a revenue of ₹11,634 crore in FY24. However, its losses, though decreasing, still stand at a substantial ₹2,350 crore.

Read More: Swiggy IPO: What's This Food Tech Startup Delivering to Investors?

Aggressive Valuation Raises Eyebrows

Bajaj Broking's analysis points to aggressive valuation metrics, with a price-to-book ratio of 11.60 based on June 2024 figures. This high valuation is particularly concerning given the company's negative earnings per share and return on net worth.

"While Swiggy has shown impressive growth in the hyperlocal commerce sector, its path to profitability remains uncertain," says a spokesperson at Bajaj Broking on condition of anonymity. "The company faces significant operational costs and intense competition from established players like Zomato and Zepto."

Competition and Profitability Remain Key Challenges

The Indian food delivery market is a battleground, with Swiggy, Zomato, and Zepto vying for dominance. This intense competition puts pressure on profitability, as companies offer discounts and incentives to attract and retain customers. Additionally, rising operational costs, including delivery and technology expenses, further challenge Swiggy's bottom line.

Long-Term Potential vs. Short-Term Risks

Despite these concerns, Bajaj Broking acknowledges Swiggy's long-term growth potential in the expanding hyperlocal commerce market. The company's focus on technology enhancement and quick commerce expansion could yield positive results in the future.

However, the brokerage firm emphasizes that the IPO is better suited for investors with a long-term horizon who are willing to withstand potential short-term volatility and financial risks. Investors seeking quick gains may find the current valuation and profitability concerns unappealing.

Read More: Mukesh Ambani’s Reliance Jio IPO 2025: Date, Valuation, & Latest News

Key Takeaways for Investors on Swiggy IPO

• Swiggy's IPO is priced between ₹371 and ₹390 per share.
• Bajaj Broking recommends a "Subscribe for Long Term" rating.
• Concerns persist over high valuation and profitability challenges.
• Intense competition from Zomato and Zepto adds to the pressure.
• Long-term growth potential exists in the hyperlocal commerce market.

Disclaimer: This news story is based on information provided by Bajaj Broking and publicly available data. Investors are advised to conduct their own research and consult with financial advisors before making any investment decisions.

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