Food and grocery delivery platform Swiggy is looking at markets beyond the top 100 cities for further expansion in both food delivery and quick commerce segments, the IPO-bound company’s management said on Wednesday.
The quick commerce segment is at currently 40% gross order value (GOV) of Swiggy’s food delivery business, though scaling the growth further will be slow, they added.
“We see headroom for growth beyond the tier 1 markets for the food delivery business. For Instamart, we see scope to expand presence within the tier 2 and tier 3 markets, something which we are seeing a challenge in doing in the metros,” Amitesh jha, chief executive officer – Swiggy Instamart.
Instamart is currently present in 43 cities, and Jha said that the focus is to grow its presence in the non-metros markets the service is currently live in. He did not specify what challenges the company is facing for doing the same in the metros.
“Within any market, we identify the consumer (base) that is more likely to transact (early adopters) and then grow the base from there,” Jha added.
Swiggy’s initial public offering will open on November 6 and close on November 8 with the anchor investor bidding date being set one day prior on November 5.
The platform aims to raise Rs 11, 300 crore through a combination of fresh issues (Rs 4, 499 crore) and offers for sale by existing shareholders.
Of this, a major chunk has been earmarked for dark store expansion to fuel growth in the q-commerce segment. According to disclosures in the red herring prospectus filed by the company, it will spend Rs 1178.8 crore between FY25 and FY28 to expand its dark store footprint.
Another large bucket of expenditure from the funds raised is brand marketing and business promotion expenses for enhancing the brand awareness and visibility of the platform across segments, for which it has allocated Rs 1115.3 crore over the same investment window.
The price band of the offer has been fixed from Rs 371 per share to Rs 390 per share. Bids can be made for a minimum of 38 shares and in multiples of 38 shares thereafter.
Swiggy’s competitor Zomato currently outpaces the IPO-bound company across key performance indicators in food delivery and quick commerce. The average order value in food delivery for FY24 is the same (Rs 428), though Zomato has a significantly higher average order value when it comes to quick commerce at Rs 613 versus Swiggy’s Rs 460.
Zomato operates in the quick commerce segment through Blinkit (formerly called Grofers) which it acquired in 2022.
From: financialexpress
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