Shares of Swiggy Ltd. were in focus on Wednesday, September 24, climbing 2% to ₹458.20, after the company announced a significant stake sale in cab aggregator Rapido and the restructuring of its quick-commerce arm Instamart.
Swiggy’s board has approved the divestment of its entire 11.8% stake in Rapido, valued at a total of ₹2,398 crore. The breakup includes the sale of 10 equity shares and 1,63,990 Series D CCPS to MIH Investments One B.V., Netherlands, for ₹1,968 crore, and 35,958 Series D CCPS to Setu AIF Trust (Westbridge) for ₹430 crore.
In a parallel move, the board also cleared the sale and transfer of Instamart to Swiggy Instamart Pvt Ltd., an indirect wholly-owned subsidiary, via a slump sale.
Brokerage firm JM Financial earlier this week downgraded Swiggy to a “reduce” rating from “hold” and cut its target price to ₹420, flagging concerns about the company’s balance sheet. The firm stressed that Swiggy required a much larger fundraise, pegged at over $500 million, to support long-term ambitions in quick commerce, especially with competition from Blinkit, which has been growing faster.
Despite Instamart’s strong 100% YoY growth in gross order value, JM Financial noted that Swiggy’s quick-commerce arm is losing market share to rivals. The brokerage also highlighted that Swiggy has been reporting widening losses for five straight quarters, with net losses of ₹2,278 crore in the latest quarter, and cumulative losses crossing ₹6,600 crore over the last nine quarters.
At the time of writing, investor sentiment appeared buoyed by the Rapido stake sale announcement, even as analysts continued to caution about the company’s near-term financial challenges.
