Tue Nov 12 14:39:03 UTC 2024: ## Swiggy’s IPO Faces Tepid Response Amidst Profitability Concerns

**MUMBAI, INDIA -** Despite being the second-largest food delivery service in India, Swiggy’s initial public offering (IPO) has met with a lukewarm response from investors. The IPO, which is set to list on November 13, saw a subscription rate of 3.59 times, making it one of the lowest among new-age companies since 2021.

The lukewarm reception is attributed to Swiggy’s lack of profitability and its declining market share compared to arch-rival Zomato. While Zomato has already achieved profitability, Swiggy continues to operate at a loss, raising concerns among investors.

“Swiggy lacks a clear path to profitability, and its growth prospects are uncertain,” said Kranthi Bathini, Director at Wealthmills Securities. “This is making investors wary and taking a wait-and-watch stance.”

Zomato, on the other hand, has seen its market capitalization more than double since its listing, reflecting its strong performance across key metrics like average order value and overall profitability. This has further fueled investor preference for Zomato over Swiggy.

Analysts believe that Swiggy needs to control expenses and generate significant revenue growth to turn around its fortunes. Despite a surge in revenue, Swiggy’s adjusted losses remained substantial in recent years.

While Swiggy has ambitious plans for expansion, analysts remain cautious. They point out the challenges of maintaining high-quality services across a range of offerings through a single app, as well as the potential impact of discounting strategies on customer loyalty and profitability.

Despite the concerns, Motilal Oswal Financial Services believes Swiggy has room to carve a unique niche in the maturing food delivery market. Its recent 10-minute delivery offering could help it regain traction, but profitability remains a distant goal.

The IPO’s grey market premium has also dropped significantly in recent weeks, indicating minimal investor enthusiasm. Analysts predict a muted debut for Swiggy’s stock on the BSE and NSE.

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