Swiggy Stock Drops Amid Foreign Ownership Cap Push
Indian food delivery firm Swiggy saw its stock price fall nearly 8% after its board approved a proposal to cap aggregate foreign ownership at 49.5%.
Swiggy's share price declined by as much as 7.8% to ₹242.60 on the BSE, following its board's approval of a proposal to limit aggregate foreign ownership to 49.5%. This move is intended to position the company as an Indian-Owned and Controlled Company (IOCC).
The stock later pared some losses, trading 5.29% lower at ₹247.75 around midday IST, valuing the company at approximately ₹68,303 Cr (about $7.1 billion). The decline is attributed to investor concerns that the proposed foreign ownership cap could lead to selling pressure from some foreign shareholders.
Swiggy will seek shareholder approval for the amended proposal. Achieving IOCC status is expected to grant the company greater regulatory flexibility, particularly for operations in sectors with foreign investment restrictions. This status is also crucial for Swiggy's quick commerce arm, Instamart, which aims to transition from a marketplace model to an inventory-led model amidst intense competition.
This is Swiggy's second attempt this year to cap foreign ownership. A previous resolution in May failed to secure the necessary 75% shareholder approval. The company stated that communication regarding the rationale for the IOCC status was insufficient during the prior attempt. The new proposal includes amendments to the company's Articles of Association and aims for more direct control over Instamart's inventory to reduce losses.