India’s stock market has a rising local flavour

Local feast. Swiggy is living up to its reputation for doing things quickly. The Indian food and grocery delivery company backed by Prosus and SoftBank Group will on Wednesday start taking orders for its $1.35 billion Mumbai initial public offering. It's shrugging off the volatility U.S. elections could induce in markets. The timing reflects both the issuer's urgency and the increasing role of domestic investors in the $5 trillion stock market.

There are a couple of reasons to rush. Swiggy's largest rival, publicly traded Zomato , is planning to raise up to $1 billion in a secondary equity offering. The $25 billion company is cashing up ahead of an entry by Mukesh Ambani 's giant conglomerate Reliance Industries into "quick-commerce", the home delivery of grocery items within 10 minutes or so. What's more, India's economic growth is slowing and consumption signals are starting to flash red.

For its part, Swiggy has scaled back its ambition. Its targeted market value of $10.4 billion at the upper end of the price range is less than the headline figure of its last fundraising round in 2022. And it equates to a multiple of 6.6 times forward sales after annualising revenue during the three months to the end of June, or nearly half the multiple of Zomato. Nonetheless Swiggy's shrinking premium in the grey market - a metric Indian media love to shout about - implies a muted debut when the stock officially starts to trade around Nov. 13.

Issuers can at least rely on a local cushion. Indians continue to pump their savings into the market at a time overseas investors are cashing out: foreigners sold a monthly record $11 billion of stock in October, taking the Nifty 50 benchmark down 6%, though companies still trade on average at a punchy 24 times forward earnings. The downward drag would have been greater in the past. Foreign ownership of stocks at 17.5% is near a 12-year low, according to data provider Primeinfobase. That makes the timing of Swiggy's share sale look slightly less bold.

Context News

Indian food and grocery delivery company Swiggy will on Nov. 6 start accepting orders from retail investors for shares in its initial public offering. The Prosus and SoftBank-backed company is seeking to raise up to $1.35 billion at a valuation of up to $10.4 billion at the upper end of the marketed price range, per a term sheet seen by Breakingviews.