Swiggy’s IPO valuation falls short of market leader Zomato’s despite food delivery sector boom

As one of India’s leading food delivery and quick commerce platforms, Swiggy is all set to go public with an initial public offering next month. However, the valuation it is seeking is significantly lower than its main competitor Zomato.

According to documents filed, Swiggy plans to list at a valuation of up to $11.3 billion, raising $1.34 billion through the IPO. This includes $535 million from fresh equity. While this valuation represents a premium over Swiggy’s private valuation of $10.7 billion earlier this year, it is around 57% lower than Zomato’s current market capitalization of $26.2 billion.

In terms of IPO pricing, Swiggy has set a price band of ₹371 to ₹390 (around $4.41-$4.64) per share. At the upper end of this range, the $11.3 billion valuation would only provide a modest increase over its last private valuation round. Interestingly, this is below recent valuations given by mutual fund investors Invesco and Baron.

Once the dominant player in India’s food delivery space, Swiggy’s market share has declined over the past few years. It now ranks third in the quick commerce segment behind Zomato-owned BlinkIt and market leader Zepto. With declining market leadership, it seems investors are taking a more cautious approach in valuing Swiggy compared to its profitable rival Zomato.

The IPO will be a major test for Swiggy to not only raise larger funds but also to regain lost investor confidence against the backdrop of fierce competition in India’s booming food tech industry.