Food and groceries delivery company Swiggy is exploring a qualified institutional placement (QIP) of up to $1.5 billion to strengthen its balance sheet and bolster its position in the fast-expanding quick commerce market, multiple people aware of the proposed fundraising told ET.
With Zepto’s recent mobilisation of funds reigniting competition in the sector, Swiggy is also evaluating a separate capital raise for its 10-minute delivery unit Instamart, which was recently moved under a standalone subsidiary.
While discussions with potential investors are still at an early stage, the size of the proposed Swiggy QIP, currently at $1 billion, could go up to as high as $1.5 billion, said another person aware of the fundraising.
If the placement goes through, Swiggy will be able to increase its domestic shareholding as it considers transitioning to an inventory-led model.
Another person familiar with the plans said the Bengaluru-based company is also open to raising capital independently for its quick commerce business, which now operates as a step-down subsidiary.
At current market price of Rs 420.50 a share, Swiggy's market capitalisation is about Rs 96,000 crore.
Swiggy did not respond to detailed queries sent by ET until the publication of this report.
The latest fundraising by Zepto, its cofounder and CEO Aadit Palicha said, had boosted the company's cash reserve to $900 million after the closure of the $450-million financing, which included secondary sale of shares by existing investors.
Building a moat
Analysts said the proposed QIP highlights Swiggy’s intent to fortify its balance sheet before competition intensifies further.
Also Read: ETtech Explainer: Swiggy's losses balloon despite push to improve economics
“The quick commerce space is in an armed standoff between incumbents with strong cash reserves. External factors such as Amazon Now, Flipkart Minutes and the entry of JioMart add another layer of competition — although they have yet to prove their mettle,” said Karan Taurani, executive vice president, Elara Securities, a Mumbai-based brokerage firm.
As of June 30, the food and grocery delivery major had cash of around Rs 5,300 crore. This will rise by another Rs 2,400 crore once the sale of its stake in bike-taxi startup Rapido to Prosus and WestBridge Capital is completed. The transaction will take Swiggy’s total cash balance to around Rs 7,800 crore.
However, the company burned more than Rs 1,000 crore in the April-June quarter, and at a similar pace, its cash runway is estimated to last six to seven months.
“There is a general favourable trend toward overall consumption and, especially, quick commerce. If Swiggy wants to raise from public market investors, this would be the time to do so,” said a Mumbai-based analyst with a global brokerage firm. “Given Zepto’s recent funding round, competition is expected to pick up again, and a strong balance sheet will ensure Swiggy does not lose out on growth opportunities.”
Meanwhile, Gurugram-based Eternal — the parent company of India’s largest quick commerce firm Blinkit and food delivery firm Zomato — is sitting on more than Rs 18,000 crore in cash balance as of September 30. A large part of its spending is directed toward Blinkit each quarter, while positive cash flow from its food delivery unit Zomato and treasury income of Rs 180-200 crore per quarter ensure the company’s overall cash burn remains limited.
Blinkit CEO Albinder Dhindsa recently said the company will prioritise “high-quality sustainable growth” over short-term margins. For the September quarter, Eternal’s net cash burn stood at Rs 543 crore. The company plans to expand its dark store network to 2,100 by December this year and to 3,000 by March 2027, up from 1,816 micro-warehouses at the end of the last quarter.
The inventory model
In July, Swiggy’s chief financial officer Rahul Bothra said the company might consider shifting to an inventory-led model, similar to Blinkit’s transition after Eternal became a majority Indian-owned company following its November 2024 QIP.
At present, foreign investors own just under 60% of Swiggy. In an inventory-led model, the company directly owns and sells products listed on its platform, unlike the current marketplace structure where it connects consumers with third-party sellers and brands.
Analysts and industry executives said that although the inventory model requires higher working capital, it allows platforms greater control over sourcing, pricing and delivery experience.
However, under India’s foreign direct investment (FDI) rules, online commerce firms with majority foreign ownership can only operate as marketplaces.
A shift in ownership could, therefore, open up more operational flexibility for Swiggy.
“A higher domestic shareholding will help Swiggy transition to a structure that allows it to stock and sell directly. This can improve margins and product control, which is critical in quick commerce,” said a senior industry executive.
Industry watchers believe Swiggy is positioning itself ahead of a renewed investment cycle in quick commerce.
“Zepto and Blinkit have both strengthened their war chests, and with Flipkart pushing aggressively into 10-minute delivery, Swiggy is likely taking pre-emptive steps to ensure it does not fall behind,” the person added.
Also Read: Blinkit tops quick commerce with over 50% market share, set to gain more: BofA
With Zepto’s recent mobilisation of funds reigniting competition in the sector, Swiggy is also evaluating a separate capital raise for its 10-minute delivery unit Instamart, which was recently moved under a standalone subsidiary.
While discussions with potential investors are still at an early stage, the size of the proposed Swiggy QIP, currently at $1 billion, could go up to as high as $1.5 billion, said another person aware of the fundraising.
If the placement goes through, Swiggy will be able to increase its domestic shareholding as it considers transitioning to an inventory-led model.
Another person familiar with the plans said the Bengaluru-based company is also open to raising capital independently for its quick commerce business, which now operates as a step-down subsidiary.
At current market price of Rs 420.50 a share, Swiggy's market capitalisation is about Rs 96,000 crore.
Swiggy did not respond to detailed queries sent by ET until the publication of this report.
The latest fundraising by Zepto, its cofounder and CEO Aadit Palicha said, had boosted the company's cash reserve to $900 million after the closure of the $450-million financing, which included secondary sale of shares by existing investors.
Building a moat
Analysts said the proposed QIP highlights Swiggy’s intent to fortify its balance sheet before competition intensifies further.
Also Read: ETtech Explainer: Swiggy's losses balloon despite push to improve economics
“The quick commerce space is in an armed standoff between incumbents with strong cash reserves. External factors such as Amazon Now, Flipkart Minutes and the entry of JioMart add another layer of competition — although they have yet to prove their mettle,” said Karan Taurani, executive vice president, Elara Securities, a Mumbai-based brokerage firm.
As of June 30, the food and grocery delivery major had cash of around Rs 5,300 crore. This will rise by another Rs 2,400 crore once the sale of its stake in bike-taxi startup Rapido to Prosus and WestBridge Capital is completed. The transaction will take Swiggy’s total cash balance to around Rs 7,800 crore.
However, the company burned more than Rs 1,000 crore in the April-June quarter, and at a similar pace, its cash runway is estimated to last six to seven months.
“There is a general favourable trend toward overall consumption and, especially, quick commerce. If Swiggy wants to raise from public market investors, this would be the time to do so,” said a Mumbai-based analyst with a global brokerage firm. “Given Zepto’s recent funding round, competition is expected to pick up again, and a strong balance sheet will ensure Swiggy does not lose out on growth opportunities.”
Meanwhile, Gurugram-based Eternal — the parent company of India’s largest quick commerce firm Blinkit and food delivery firm Zomato — is sitting on more than Rs 18,000 crore in cash balance as of September 30. A large part of its spending is directed toward Blinkit each quarter, while positive cash flow from its food delivery unit Zomato and treasury income of Rs 180-200 crore per quarter ensure the company’s overall cash burn remains limited.
Blinkit CEO Albinder Dhindsa recently said the company will prioritise “high-quality sustainable growth” over short-term margins. For the September quarter, Eternal’s net cash burn stood at Rs 543 crore. The company plans to expand its dark store network to 2,100 by December this year and to 3,000 by March 2027, up from 1,816 micro-warehouses at the end of the last quarter.
The inventory model
In July, Swiggy’s chief financial officer Rahul Bothra said the company might consider shifting to an inventory-led model, similar to Blinkit’s transition after Eternal became a majority Indian-owned company following its November 2024 QIP.
At present, foreign investors own just under 60% of Swiggy. In an inventory-led model, the company directly owns and sells products listed on its platform, unlike the current marketplace structure where it connects consumers with third-party sellers and brands.
Analysts and industry executives said that although the inventory model requires higher working capital, it allows platforms greater control over sourcing, pricing and delivery experience.
However, under India’s foreign direct investment (FDI) rules, online commerce firms with majority foreign ownership can only operate as marketplaces.
A shift in ownership could, therefore, open up more operational flexibility for Swiggy.
“A higher domestic shareholding will help Swiggy transition to a structure that allows it to stock and sell directly. This can improve margins and product control, which is critical in quick commerce,” said a senior industry executive.
Industry watchers believe Swiggy is positioning itself ahead of a renewed investment cycle in quick commerce.
“Zepto and Blinkit have both strengthened their war chests, and with Flipkart pushing aggressively into 10-minute delivery, Swiggy is likely taking pre-emptive steps to ensure it does not fall behind,” the person added.
Also Read: Blinkit tops quick commerce with over 50% market share, set to gain more: BofA
