Swiggy IPO listing delivers pleasant surprise to investors. Sell now or hold?

Swiggy listing: With the company's shares opening at Rs 420 on the National Stock Exchange (NSE), marking a solid 7.6% premium over its issue price of Rs 390, the performance has exceeded initial expectations

In Short

• Swiggy's IPO beats initial grey market premium predictions
• Bengaluru-based firm's IPO lists at a 7.6% premium on NSE
• Analysts highlight Swiggy’s growth potential amidst challenging market conditions

Swiggy’s IPO debut turned a few heads on Tuesday, delivering a pleasantly surprising start on the stock market.

With shares opening at Rs 420 on the National Stock Exchange (NSE), marking a decent 7.6% premium over its issue price of Rs 390, the performance has exceeded initial expectations, setting the stage for an interesting play between two food delivery giants in India’s stock market.

At 12:06 pm, shares of Swiggy were trading 5.48% higher at Rs 443 on the NSE. Swiggy’s market debut may not have led to windfall gains for investors, but it has performed better than what analysts expected, even as the mood on Dalal Street continues to be gloomy.

SHOULD YOU SELL OR HOLD?

Gaurav Garg of Lemonn Markets Desk captured the mood: “Swiggy debuted at Rs 420, marking a listing gain of 7.6%, which outpaced its grey market premium (GMP) estimate of just 0.26%.”

While a premium listing has grabbed attention, Garg noted retail investors remain cautious.

“Retail investors showed modest interest, subscribing only 1.14 times, indicating low confidence,” he said, pointing out that “current market conditions have kept many investors on the sidelines, especially as numerous high-quality companies remain 15-20% below their all-time highs.”

However, for those ready to take a bolder bet, Swiggy could prove enticing.

Garg suggests there’s a chance to “capitalise on the valuation gap between Zomato and Swiggy, with potential gains hinging on Swiggy’s ability to enhance operational efficiency over time.”

Shivani Nyati, Head of Wealth at Swastika Investmart Ltd, brought an optimistic tone, describing the listing as a “decent debut” given initial muted expectations.

Nyati pointed to Swiggy’s “strong brand recognition, extensive network, and dominant position” in the food delivery market, which seem to have fueled the initial enthusiasm. However, she advised balancing optimism with caution, saying, “The company’s continued losses and the challenging market conditions may temper investor enthusiasm in the long term.”

For those already holding shares, Nyati recommended a stop-loss around the issue price to keep risks in check.

Adding another layer to the story, Tarun Singh, Founder & MD of Highbrow Securities, highlighted the current dominance of “short-term subscribers” in Swiggy’s listing. He observed that interest from non-institutional and retail investors was subdued, attributing it to Swiggy’s high valuation.

“This can be attributed to the company’s higher valuation when compared to its only listed peer, making it challenging for investors to justify any frantic applying in IPO,” Singh said.

Nonetheless, he recognised the company’s potential, saying, “Swiggy’s sectoral opportunity, its market share, and readiness are undeniable. In principle, the company’s potential warrants attention.”

Singh suggested that long-term investors give Swiggy a little time to settle, advising them to watch how the stock performs over the December quarter.

“A decent financial reporting will validate Swiggy’s potential as a good long-term hold,” he noted.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)