Swiggy’s IPO has sparked considerable excitement in India’s market, and noted valuation expert Aswath Damodaran offers a deep analysis of its potential and risks. With Swiggy’s strong position in the food delivery market, Damodaran acknowledges its notable growth trajectory but emphasizes that it carries substantial risks. His evaluation compares Swiggy closely with Zomato, noting that although Zomato set a positive precedent with its IPO, both companies face profitability challenges due to the high cost structures associated with food delivery.
Damodaran argues that Swiggy’s core business is rooted in customer acquisition costs and promotions, which could lead to volatility in post-IPO performance. Investors are advised to consider Swiggy’s large revenue base and competitive position against Zomato, yet Damodaran suggests that it may be prudent to approach the IPO with caution, especially in light of the broader economic and consumer spending context in India.
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