Shares of Swiggy, the popular food delivery and quick commerce service, experienced a sharp decline shortly after their much-anticipated initial public offering (IPO). On the second day of trading, the stock plummeted nearly 6 percent, closing at around Rs 429.85 on the Bombay Stock Exchange (BSE) and Rs 430.70 on the National Stock Exchange (NSE), causing significant concern among investors. At the peak of trading, shares had dipped as low as Rs 418.65, reflecting heightened volatility surrounding the newly public company.
Swiggy’s initial public offering, which raised approximately Rs 11,327 crore, was initially met with substantial enthusiasm from investors. The IPO was fully subscribed on its last day, signaling strong demand as it garnered 3.59 times more bids than available shares. On the listing day, Swiggy’s shares surged nearly 17 percent above their issue price of Rs 390, quickly pushing its market valuation past the Rs 1 lakh crore mark—a milestone for the company as it joined the ranks of India’s most valuable startups.
Despite the initial excitement, the quick turnaround from soaring IPO prices to substantial declines raised questions about what lies ahead for Swiggy. The company, once seen as invincible within the food tech sector, is now experiencing what some analysts describe as typical post-IPO volatility. Investors were taken aback when the stock lost about Rs 5,842.35 crore of its valuation, leaving its overall market worth at approximately Rs 96,219.66 crore.
Such dramatic fluctuations are not unprecedented within the Indian IPO market, though this situation has particularly highlighted the importance of investor sentiment and market conditions. Experts believe the current climate of economic uncertainty and rising interest rates is making many investors hesitant to commit their capital. With valuations appearing increasingly disconnected from company fundamentals, retail investor participation—which had previously fueled several oversubscribed IPOs—seems to be cooling.
Past IPOs of noteworthy companies this year, including Hyundai Motors India (which made history with its record Rs 28,756 crore IPO) and Swiggy, initially drew massive interest. Still, market analysts caution this exuberance may have been premature. Ritin Agarwal, Managing Partner at Fundvice, noted, “High-profile listings have set a high bar, and subsequent IPOs have struggled to measure up.” This observation resonates as investors recalibrate expectations relating to future public offerings.
Further complicate the picture, regulatory changes by India’s Securities and Exchange Board (SEBI) have been put in place to curb speculative buying practices. These newly tightened regulations aim to prioritize long-term investment over speculative activity, which could explain the lukewarm reception of several recent listings. For example, the IPO of Resourceful Automobile, which attracted almost 500 times retail subscriptions without any anchor investors, starkly contrasts with Usha Financial Services' IPO, which managed to secure just 20 times subscriptions, showing how varying levels of investor confidence are reflected by subscription figures.
Experts stress it is too soon to make sweeping declarations about the IPO market's decline. While some believe investors are experiencing fatigue after so many high-profile offerings, others argue the market correction merely reflects heightened scrutiny over stock valuations and fundamentals. Tarun Singh, Founder and MD of Highbrow Securities, stated, “Investors are becoming more discerning,” pointing to changing attitudes among market participants who are now focused more on sound investments rather than hype-driven opportunities.
Looking forward, there is guarded optimism about the future of the IPO market. Singh expressed confidence, saying investor interest remains intact, albeit measured. “With regulatory changes and cautious sentiment, the market is undergoing a correction rather than decline.” Agarwal also predicted short-term fluctuations could pave the way for larger, impactful IPOs, emphasizing the continuing evolution of investor expectations and the potential alignment between founded company valuations and market sentiments.
Despite the current dip, the structural changes within the market, alongside shifting investor strategies, may result in positive outcomes for substantial offerings, particularly if businesses align their valuations with genuine investor expectations. Meanwhile, as Swiggy navigates this turbulent waters following its IPO, it faces challenges and opportunities alike, reminding everyone within the marketplace of the complex interplays of perception and value.
