Last update:November 14, 2024, 10:24 am IST

According to Swiggy’s draft Red Herring Prospectus, the total number of ESOPs outstanding in September 2024 stood at 231 crore, valued at Rs 9,046.65 crore based on the upper IPO price range of Rs 390 per share.

Swiggy allowed its employees to sell shares a month after the IPO, bypassing the mandatory one-year lock-up period by the Securities and Exchange Board of India (SEBI).

Hundreds of Swiggy employees are set to become millionaires after the food delivery aggregator made a successful stock market debut on November 13, with shares listed at Rs 420 on the National Stock Exchange (NSE), reflecting a premium of 7, 7% over the IPO price. of Rs.390

On the Bombay Stock Exchange (BSE), shares of Swiggy opened at Rs 412, marking a 5.64% increase from the IPO price. The listing would also provide significant value to employee stock option plans (ESOPs).

This IPO is considered to be one of the biggest wealth creation events in India’s startup ecosystem, which will make Crorepatis around 500 employees.

How did Swiggy do it?

According to Swiggy’s Project Red Herring Prospectus (DRHP), the total number of outstanding Employee Stock Options (ESOPs) in September 2024 stood at 231 million, valued at Rs 9,046.65 million, based on the upper price range of the IPO of Rs 390 per share.

This development is expected to lift nearly 500 Swiggy employees, who would join the Crorepati club with their ESOP holdings worth several crores. In all, about 5,000 employees will benefit from the ESOP payouts, according to reports from The Economic Times.

Swiggy’s ESOP payout will be among the largest in India’s startup sector, compared to rival Walmart-owned Flipkart’s massive $1.4-1.5 billion payout.

Swiggy allowed its employees to sell shares a month after the IPO, bypassing the mandatory one-year lock-up period by the Securities and Exchange Board of India (SEBI).

Swiggy’s founders and top management were given ESOPs worth nearly Rs 2,600 crore in its latest share plan. It includes group founder and CEO Sriharsha Majety, co-founders Nandan Reddy and Phani Kishan Addepalli; CFO Rahul Bothra; Chief Technology Officer Madhusudan Rao; Food Market CEO Rohit Kapoor; and newly appointed CEO of Swiggy Instamart, Amitesh Jha. There are nine senior executives who will become richer by 50 million lei or more, according to a report by The Economic Times.

Swiggy’s rival Zomato, which went public in July 2021, minted $18 million through its Rs 9,375 crore IPO. The report further mentioned that at the time of Paytm’s IPO in November 2021, around 350 employees, both current and former, have become crorepatis.

What is the role of SEBI in IPO?

The DHRP report revealed that Swiggy has introduced three ESOP plans till date: Swiggy Employee Stock Option Plan 2015, Swiggy Employee Stock Option Plan 2021 and Swiggy Employee Stock Option Plan 2024.

Also, SEBI’s exemption in July, which allowed Swiggy employees to sell shares just a month after the IPO, instead of waiting a year, helped boost wealth creation opportunities.

The Bengaluru-based company has filed draft documents for the IPO with SEBI through the confidential filing route in April 2024.

Sebi introduced the ‘preliminary filing’ route in 2022, allowing companies to keep details of preliminary filings confidential. This route gives companies more flexibility in determining the size of the problem. The number of proposed new shares may be adjusted by up to 50% pending the filing of the updated DRHP, according to a report by The Economic Times.

What does Swiggy’s report look like?

Swiggy reported a 36% year-on-year growth in its FY24 operating income at Rs 11,247 crore, driven by strong growth in its Instamart e-commerce segment and out-of-home business.

Its net loss narrowed to 2,350 million lei, 44% lower than a year ago, according to its annual report. Its rival Zomato, in contrast, reported a net profit of Rs 351 crore in FY24.

Swiggy has laid off 6% of its workforce, affecting at least 350-400 roles across technology, call center and corporate teams.

Swiggy’s operating income of Rs 11,247 crore for the year ended March 31 compared to Zomato’s Rs 12,114 crore in the same period.

Swiggy’s flagship food delivery business reported gross order value (GOV) of Rs 24,700 crore, up 15% over FY23. This is against Zomato’s Rs 32,224 crore, which translates to a 56% share in food delivery for the Gurgaon-based company.

Meanwhile, e-commerce vertical Instamart reported 58% growth in GOV to Rs 8,100 crore, or nearly $1 billion, in FY24.

What is an IPO and how to invest in it?

A private company offers its shares to the public for the first time through an IPO. Capital, which a company raises from investors by going public, can be used to expand operations, pay off debt, or fund research and development.

When a company lists its shares on a stock market, it becomes a publicly traded entity, allowing investors to buy and sell its shares on the open market.

For a company to be eligible for an IPO listing in India, it must meet certain criteria set by SEBI. These include:

Net tangible assets: The company should have net tangible assets of at least Rs 3 crore for the last three years.

return: The company should have generated profit in at least three of the last five years.

Net worth: The net worth of the company should have been at least Rs 1 crore in the last three years.

The size of the problem: The issue should not exceed five times the net worth before issue.

To invest in an IPO, thoroughly research the company, financials, business model and growth prospects.

You must have a Demat account and a trading account with a registered stockbroker.

Once the IPO opens for subscription, you can apply through your broker’s platform. of values ​​or using the ASBA (Application Supported by Blocked Amount) facility offered by banks

After the end of the subscription period, shares are allocated based on demand and subscription level. The shares will be credited to your Demat account if you get an allotment.