Swiggy, Zepto race for ₹15,000cr public market funding
What's the story
The battle for quick commerce market share is heating up as Swiggy and Zepto prepare to tap into public markets. The potential fundraises could total as much as ₹15,000 crore. Industry experts say both companies are vying for the second position after Blinkit in a bid to strengthen their appeal and draw investor interest.
Financial status
Swiggy and Zepto's cash reserves
As of September 30, Blinkit, the market leader in the sector, had cash reserves of ₹18,314 crore. Swiggy and Zepto are not far behind with ₹4,605 crore and around ₹7,000 crore in their coffers, respectively. A BofA research note from September revealed that Blinkit commands over 50% market share with other players like Instamart, Zepto, BigBasket, Flipkart Minutes and Amazon Now sharing the rest.
Fundraising efforts
Swiggy's QIP and Zepto's confidential filing
Swiggy is currently pitching a qualified institutional placement (QIP) of up to ₹10,000 crore. Meanwhile, Zepto is said to be preparing a confidential filing to raise around ₹4,000 crore. After the QIP and the closure of its stake sale in bike taxi start-up Rapido, Swiggy will have around ₹17,000 crore in cash.
Competition intensifies
Market share tussle between Swiggy and Zepto
The competition for the second spot has intensified with Zepto's recent fee waivers and promotions boosting its order volumes. This has led to a lead over Swiggy's fast-delivery business, Swiggy Instamart. However, Swiggy contested a brokerage note claiming that Instamart had lost order market share to Zepto in recent months.
Financial strain
Impact of cash burn on quick commerce sector
The ongoing tussle has led to an increase in cash burn across the sector. Swiggy's consolidated cash burn for Q3 stood at ₹740 crore while Eternal's was ₹543 crore. Zepto's cash burn has also gone up to over ₹500 crore per month with a gross order value of around ₹2,000 crore. Cash burn refers to how fast a company spends its reserves on operating expenses before generating positive cash flows.