Shares of Swiggy rose 10.67% on its debut day at ₹455.95 ($5.4) on Wednesday as the food-delivery and quick-commerce startup concluded India's second-largest IPO this year. The closely watched listing makes the company a direct comparable for what analysts have long considered the benchmark Indian internet stock: Zomato.

The listing of the 10-year-old Bengaluru-headquartered firm marks a milestone for India's startup ecosystem where several firms are eyeing similarly large public offerings in the next 24 months. It is also a major liquidity event for Swiggy's backers, which include Prosus (its paper returns have already reached $2 billion), SoftBank and Accel. Some 5,000 employees stand to collectively reap about $1 billion.

In the leadup to the $1.4 billion IPO, Swiggy set its valuation at $11.3 billion, a decidedly conservative figure considering Zomato recently hit a market-cap high of $29 billion .
Co-founder and chief executive Sriharsha Majety said in an interview that the firm wanted to make the offering exciting for new investors. The company's market cap jumped to $12.3 billion on Wednesday.

Swiggy's bright debut on Wednesday defied weak market in India this week as benchmark Sensex and Nifty extend decline for fourth straight day.

I'm super excited that the company itself is coming at this incredible time," Majety said in a speech. "When we look at next one to two decades, I think it's India's next two decades. There's so much economic growth in front of us. The Indian pride is at an all-time high."

It is entering public markets at a sensitive time in India's burgeoning e-commerce landscape for Swiggy. The company has emerged as India's second-largest food delivery platform with 14 million monthly active users, but it trails market leader Zomato on all key metrics, its annualized gross order value in food delivery having reached a paltry $3.3 billion and running about 25 percent behind that of Zomato, according to Macquarie.

The gap here is much bigger when it comes to the fast-growing and increasingly important quick-commerce sector – services promising deliveries of grocery, wellness, beauty products, and more, all within 15 minutes. Swiggy's Instamart service has 5.2 million monthly users, while Zomato-owned Blinkit has 7.6 million monthly users.

There's another, much more material metric that new public market investors will care about: whereas Blinkit has reached adjusted EBITDA break even, Instamart remains a money loser even at the contribution margin level.

Each business segment of Swiggy merits a lower target valuation multiple than that of Zomato's on account of poorer execution in the past, which has led to enlargements of the market share gap, said JMFinancial analysts on Wednesday.

Yet the potential is enormous. Morgan Stanley calculates gross order values in India's quick-commerce market could reach as high as $42 billion by 2030, exceeding more than 18% of total India's e-commerce market. The sector has already doubled 77% per annum since it took off amid the pandemic.

Quick-commerce platforms already captured 56% of the online grocery delivery market from other traditional e-commerce players, according to JPMorgan.

Yet competitive pressures are building. Traditional retailers such as Flipkart and Reliance's JioMart are opening their own next-generation delivery services. There are also some open questions on whether the model will work outside the large Indian metros, since it relies on dense networks of smaller warehouses.