Swiggy: India's Food Super-App Reaches New Gluttonous Heights

If on-demand grocery delivery is "democratizing the right to laziness," as one Turkish startup executive describes it, India, the world's largest democracy, may have the laziest consumers. And food super-app, the Prosus and SoftBank-backed (9984.T) Swiggy, is feeding that possibility.

Swiggy is half of India’s restaurant delivery duopoly.  It has branched out into additional services, such as allowing users to send edible gifts and other goods to each other. The most amazing feature is its in-app Instamart, which delivers items ranging from curry leaves to condoms to shoppers in 15 to 30 minutes.

Swiggy employs "dark stores" to reduce processing and delivery times. These are mini warehouses situated amongst mom-and-pop stores. Furthermore, because they are managed independently by sellers, they protect Swiggy and its international investors from severe restrictions that ban foreign corporations, like Amazon.com, from running inventory-based e-commerce in the country.

Instamart is locking in higher-spending users at a fast rate. In just 19 cities as of last month, Swiggy expects the unit to hit an annualized run-rate of $1 billion worth of orders this year – one-third of the trend of its core restaurant food delivery service operating across some 500 cities. Groceries can help Swiggy hit its goal of 100 million users transacting on the app every other day.

Swiggy's closest rival Zomato abandoned its own rapid grocery effort in September, instead of investing in smaller peer Blinkit.

Competition is fierce, with Reliance Industries-backed Dunzo and Tata’s BigBasket among others fighting for market share.

The huge cash requirement could force Swiggy to accelerate towards A listing. In a January fundraising round spearheaded by Invesco, its company was valued at $10.7 billion. Swiggy is valued at around 14 times sales for the year to March, over three times its US peer DoorDash, assuming its top line is comparable to Zomato's $9 billion operations.

The premium may not sit well in the context of a global technology route. Zomato's share has been on a roller coaster ride, but it is now back to the price of its July offering, but Swiggy's private market pricing has nearly quadrupled over the same time period. Such a gluttonous amount would be thrown up by wary public markets.

Swiggy, an Indian food delivery business has begun preparations for an initial public offering (IPO) in early 2023, according to the Nikkei, citing unidentified people familiar with the situation.

According to the report, Swiggy is adding independent directors to its board and intends to present itself as a logistics company rather than merely a food delivery service. The company did not immediately respond to a Reuters request for comment.

Swiggy doubled its valuation to $10.7 billion, Reuters reported in January, citing sources, after raising $700 million in a funding round led by investment firm Invesco. An earlier round in July valued it at $5.5 billion.

Source: Reuters