Swiggy , a major player in India's food delivery market, has set in motion plans to divest its approximately 12% stake in ride-hailing startup Rapido. The move could potentially net Swiggy up to ₹2,500 crore, highlighting significant value creation in a relatively short span.

Rapido's Soaring Valuation

The proposed deal values Rapido at an impressive $2.7-3 billion, marking a substantial leap from its $1.1 billion valuation just last year. This valuation surge underscores the rapid growth and increasing investor interest in India's mobility sector.

Swiggy's Financial Pressures

The stake sale comes at a time when Swiggy is grappling with mounting financial pressures. The company has reported:

• Net losses of ₹2,278.00 crore in the past two quarters
• Cumulative losses exceeding ₹6,600.00 crore over nine quarters

Despite these challenges, Swiggy maintains a robust cash reserve of ₹5,354.00 crore as of the June quarter.

Investment Returns and Strategic Considerations

Swiggy's initial investment in Rapido dates back to 2022 when it injected $120 million during a funding round that valued Rapido at $827 million. If the sale materializes as planned, it would represent a 2.5X return on Swiggy's three-year investment, showcasing the company's astute investment strategy.

The food delivery giant cited a potential conflict of interest as a key driver for the divestment, noting Rapido's plans to enter the food delivery business. This move highlights the dynamic and competitive nature of India's tech-enabled service sector.

Rapido's Growth Trajectory

Rapido has demonstrated impressive growth, with its business expanding by approximately 120%. The company's annualized gross merchandise value has reached around $2.2 billion, indicating strong market traction and customer adoption.

Transaction Timeline

The stake sale is expected to conclude within a three-month timeframe, potentially reshaping the competitive landscape in India's food delivery and mobility sectors.

Implications for the Food Delivery Market

This development could have significant implications for the food delivery market in India, where Zomato Ltd is a key player. The potential entry of Rapido into food delivery, coupled with Swiggy's strategic divestment, may intensify competition in an already fiercely contested space.

As the transaction unfolds, market observers will be keenly watching its impact on the broader ecosystem of food delivery and mobility services in India. The move underscores the fluid nature of strategic alliances and investments in the rapidly evolving tech startup landscape of the country.

High net worth individuals (HNIs) have made significant moves in the stock market during the June quarter, reducing their holdings in 11 stocks despite these investments delivering double-digit returns. This strategic shift has caught the attention of market analysts and fellow investors alike.

Swiggy Sees Major HNI Exodus

The most notable exit was observed in Swiggy , where HNI shareholding witnessed a dramatic drop from 10.62% to 3.53%. This reduction represents an approximate selling value of Rs 5,400.00 crore, signaling a substantial shift in investor sentiment towards the food delivery giant.

In a related development, Swiggy is now looking to generate Rs 2,500.00 crore through the sale of its stake in Rapido. The food delivery company aims to monetize its investment in the bike taxi service provider, potentially to bolster its financial position or fund new initiatives.

Other Significant Exits

Several other companies also saw considerable reductions in HNI holdings:

• Nitco: HNIs sold shares worth approximately Rs 1,800.00 crore
• Waaree Energies: Despite the stock posting 30% gains, HNIs reduced their position by about Rs 1,400.00 crore
• Nazara Technologies: Investor Rekha Jhunjhunwala fully exited her position

HNIs also trimmed their stakes in Oriental Trimex, Reliance Industries Limited (RIL), RBL Bank, and Nykaa, even though these stocks posted positive returns during the quarter.

HNI Investment Increases

While many stocks saw reduced HNI participation, some benefited from increased interest. Kaveri Defence, for instance, saw HNI ownership surge from 24.61% to 47.99%, indicating strong confidence in the company's prospects.

Overall HNI Market Wealth Growth

Despite these exits, the total market wealth of HNIs grew by 15.5% during the quarter, reaching Rs 9.32 lakh crore. This growth suggests that while HNIs are reallocating their portfolios, their overall market participation remains robust.

Top HNI Holdings

The largest HNI holdings by value include:

Market Outlook

Analysts offer a mixed outlook on earnings, with some sectors showing signs of weakness. However, many remain optimistic about the long-term prospects of the Indian market.

This quarter's HNI movements highlight the dynamic nature of the stock market, where even high-performing stocks can see significant changes in ownership as investors reassess their portfolios and take profits. As always, individual investors are advised to conduct thorough research and consider their own financial goals before making investment decisions.