Reacting to the announcement, Mehra, in a post on networking platform LinkedIn, pointed out that Swiggy had already raised substantial sums in its IPO just a year ago.
“It had an IPO almost exactly a year ago, where about Rs 4,500 crores came into the company, and there was an offer for sale for Rs 6,800 crores plus. Now it needs only 10,000 crores more!!” she wrote, adding with irony that the company had “just discovered that it is an environment which is ‘competitive and dynamic’… And hence surprise surprise it needs more money.”
Mehra used the development to reflect on how the purpose of IPOs and fundraising norms have evolved over time.
“Money raised in an IPO was supposed to come into the company unless it genuinely did not require more capital for growth. Now the public markets mostly provide an exit for promoters and earlier round investors,” she observed. She added that repeated fundraises by companies were once viewed negatively “because they diluted the return on capital.”Taking aim at Swiggy’s losses, Mehra noted that the company’s financial performance leaves little room for investor returns. “But I suppose when you are making losses at the rate of 1,100 crores a quarter, there is anyway no return on capital to dilute … Only an insatiable appetite for capital,” she wrote.She also drew attention to the challenge of valuing loss-making technology companies, stating, “Just as a lack of earnings in many such ‘new age tech’ companies means the PE is never too high.”
Questioning investor participation in the upcoming QIP, Mehra asked, “Any bets on the institutions which will subscribe to this QIP (Qualified Institutional Placement), whose money it will be and how such stories will end?”
She concluded with a pointed reminder about valuation discipline: “A friendly reminder that there is only one way to value a company and fancy new valuation ratios & parameters are used only to justify a valuation, not to do a valuation.”
Through her remarks, Mehra underscored a broader issue: the shift in public markets from rewarding profitability and capital efficiency to facilitating exits and funding cycles for loss-making firms.
Her commentary serves as a caution to investors to remain grounded in fundamentals amid growing enthusiasm for high-valuation tech listings.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)