The Indian primary market is heating up with the much-awaited initial public offering (IPO) of Swiggy Ltd, which is set to launch on November 6. The popular online food and grocery delivery company aims to raise Rs 11,327.43 crore, making it one of the largest IPOs in India’s history. Investors are watching, but given the mixed record of past mega-IPOs, many wonder whether Swiggy will follow in the footsteps of companies like Zomato and Coal India, which brought gains or falter like Hyundai Motor India and Paytm.

Swiggy’s Offering

Swiggy’s IPO is valued at over Rs 11,000 crore. The company has seen exponential growth as it addresses a massive consumer base, but its performance will likely depend on investor sentiment, valuation confidence, and market conditions. Recent IPO trends, especially in large public issues, have shown that big names and high valuations don’t always equate to success on the stock market.

A History of India’s Mega-IPOs: Gains and Losses

India has seen numerous high-profile IPOs, with some resulting in substantial gains, while others have disappointed investors. Let’s look at some of India’s largest IPOs to see if they set any precedent for Swiggy’s journey in the market.

Hyundai Motor India IPO

Hyundai Motor India’s Rs 27,870.16-crore IPO, launched on October 15, 2024, remains the largest in the country. Despite high expectations, Hyundai Motor shares debuted on October 22 at Rs 1,931 on the BSE, a 1.5% discount from its issue price of Rs 1,960 per share. The stock further declined, hitting a low of Rs 1,751.65 on October 29. As of November 4, Hyundai Motor shares closed at Rs 1,814.55, down 7.4% from its IPO price.

LIC IPO

In May 2022, the Life Insurance Corporation of India (LIC) went public with an IPO worth Rs 21,000 crore. This highly anticipated offering, however, faced a rough start. LIC shares debuted at a discount of over 8% to the issue price of Rs 949. Market volatility and valuation concerns impacted the stock’s performance, which remains subdued compared to its launch price.

Paytm IPO

In November 2021, Paytm’s parent company, One97 Communications, launched its IPO amid a frenzy of interest. However, the fintech giant’s stock debuted at a 9% discount to its issue price, and the situation only worsened. Concerns over profitability and steep valuations led to a prolonged slump, with the stock price falling by more than 64% from its IPO level.

Reliance Power IPO

Reliance Power, from the Anil Ambani Group, went public in February 2008 with an IPO worth Rs 11,560 crore, making it one of the largest of its time. However, the stock is listed at a 17% discount to its IPO price and has since been on a downward trajectory, losing over 85% of its value. This IPO is often remembered as one of India’s most infamous due to the substantial wealth erosion for early investors.

SBI Cards & Payment Services IPO

In March 2020, SBI Cards entered the market with a Rs 10,355-crore IPO, right as the COVID-19 pandemic began impacting global markets. Consequently, the stock debuted at a 13% discount to its issue price of Rs 755, with both market conditions and high valuations affecting investor sentiment. SBI Cards shares are still down more than 8% from their listing price.

What Awaits Swiggy in the Market?

While Swiggy’s entry into the IPO market is creating significant buzz, the mixed performance of previous mega-IPOs serves as a reminder that large public offerings come with risks. Companies like Zomato and Coal India have succeeded in generating positive returns for investors, but others, particularly those with inflated valuations or unproven profitability models, have struggled post-listing.

For Swiggy, balancing high investor expectations with a sustainable business model will be key. The IPO market in India has shown that investors are keenly evaluating fundamentals and long-term growth potential. If Swiggy can demonstrate profitability or a clear path to it, it might avoid the pitfalls encountered by companies like Paytm and Reliance Power.

Story first published: Wednesday, November 6, 2024, 9:50 [IST]