Swiggy’s IPO was the talk of the town, but the outcome wasn’t exactly what the company hoped for. As one of India’s most popular food delivery platforms, Swiggy has made its mark on millions of lives, from delivering midnight snacks to helping people skip cooking on busy days. But when it came to going public, Swiggy didn’t see the kind of response it might have expected. The IPO didn’t get fully subscribed, and for a brand as big as Swiggy, that was surprising. Let’s break down why this happened and what it means for the Indian IPO scene.
1. High Valuation – Was It Too Much to Ask?
Swiggy’s valuation for the IPO was seen as quite high by many investors. Startups often go for a higher valuation because of their growth potential, but investors are becoming more cautious about backing companies with big valuations but uncertain profit paths. Swiggy has yet to show consistent profits, and with the competition in food delivery heating up, investors want to see a clearer road to profitability.
2. Profitability – Is the Food Delivery Model Really Profitable?
Let’s face it: most startups in India have been prioritizing growth over profits. Swiggy is no different, pumping in money to offer discounts, build infrastructure, and win customers. While this has helped Swiggy grow massively, it hasn’t brought them consistent profits. Investors today are more interested in companies that can actually make money and sustain it, which is why companies that aren’t yet profitable are seeing lukewarm responses. Swiggy’s heavy reliance on discounts to attract and retain customers might make it difficult to turn profitable soon, leaving investors hesitant.
3. Competition with Zomato – A Tough Market to Survive
Swiggy’s closest competitor, Zomato, is already a public company, and it hasn’t had the smoothest run in the stock market. This makes investors question if the food delivery market is simply too competitive. Both companies are burning cash to stay relevant, and it’s unclear when or if the industry will consolidate to allow any one player to gain the upper hand. This kind of competition creates uncertainty, which makes investors nervous about long-term returns.
4. Economic Conditions and Investor Caution
Global economic conditions are also playing a role here. With rising interest rates and economic uncertainty, many investors are opting for safer investment options. Rising rates mean that even fixed-income instruments, like bonds, are now offering better returns than they did previously. This has made investors less willing to take on the risk that comes with IPOs, especially for tech-driven, loss-making companies. Swiggy’s timing might just have been unfortunate, with investors choosing safer bets over the more unpredictable returns from a new IPO.
5. The Zomato and Paytm IPO Hangover
The Indian stock market has seen some high-profile IPOs of tech companies in recent years, like Zomato and Paytm. But these IPOs, after initial excitement, ended up struggling on the stock market. Both companies had ambitious valuations that didn’t quite live up to the hype, leading to losses for early investors. This has left a mark on investor sentiment, especially when it comes to other new-age tech companies like Swiggy. Potential investors are cautious, worried that Swiggy might end up on a similar trajectory.
6. Changing Sentiments in the Startup Ecosystem
Globally, there’s a shift in investor sentiment towards startups. Gone are the days when just “growth potential” would be enough to drive IPO success. Now, investors are looking for solid paths to profitability and sustainable business models. The Swiggy IPO is a reflection of this trend, as investors ask harder questions about a company’s future earnings, rather than just looking at its market share and brand value.
How to Invest Smartly in This Market
Even with all these factors at play, IPOs can still be a good investment if done smartly. Here’s where apps like Groww and Angel One can make a difference. Both of these platforms provide investors with easy-to-understand resources, analysis tools, and real-time updates on IPOs, making it easier to decide whether or not to invest in companies like Swiggy.
Groww: Groww offers a user-friendly interface that’s great for beginners. It gives a breakdown of company fundamentals, recent news, and stock analysis, so you can make well-informed decisions.
Angel One: Angel One, on the other hand, provides more comprehensive market insights and has features like IPO analysis, historical performance tracking, and expert reviews, which are especially useful when evaluating high-profile IPOs like Swiggy.
Groww App download link
https://app.groww.in/v3cO/8a5h8s83
AngelOne download link
https://angel-one.onelink.me/Wjgr/t2kktku1
Both apps let you track IPOs, understand company performance, and learn about potential risks, all in one place. And with changing investor sentiment, these tools can be a huge help in deciding where to put your money.
Final Thoughts
The Swiggy IPO’s lukewarm response is a sign of changing times. Investors are no longer just jumping on the startup bandwagon without asking tough questions. Profitability, sustainability, and market competition are key factors that investors now weigh carefully. And with platforms like Groww and Angel One making it easier to assess IPOs in detail, it’s clear that companies going public need to show more than just big dreams—they need to show they’re built to last.
Swiggy may have missed the mark this time, but the lesson here is clear: for companies aiming to go public, strong fundamentals and a clear profit path are what today’s investors are looking for.
