Good morning and a very happy Diwali to you from The Core team. In today's edition, we look at the challenges ahead for food tech major Swiggy as it prepares its initial public offering (IPO); IndiGo’s operational troubles; and everyone wanting a piece of the quick commerce cake. 

Programming Note: There won’t be a newsletter on Friday as we’re taking a break for Diwali. There will be no edition of our podcast, The Core Report on Thursday and Friday. But you can tune in to watch a new episode of The Core Report: Weekend on YouTube on Saturday featuring Marico CEO Saugata Gupta. We will go back to regular programming for both the podcast and the newsletter from Monday. 

DECODE THE NEWS

Swiggy's Post-IPO Journey Won't Be A Cakewalk

Foodtech giant Swiggy is finally taking the plunge and diving headfirst into the public market with a mega Rs 11,300 crore IPO. This marks a major milestone for the 10-year-old startup that, along with its arch-rival Zomato, transformed how Indians order food. But while the IPO drums are beating loud, Swiggy's valuation has been trimmed to $11.3-$11.4 billion (Rs 95,000 crore) – a significant drop from its initial ambitious target. What's behind this downsizing? And can Swiggy truly deliver on its public market debut?

The answer lies in a complex web of factors, from macroeconomic headwinds to cutthroat competition in the quick-commerce arena. While Swiggy and Zomato reign supreme in the food delivery kingdom, the quick-commerce battleground is a different beast altogether. Swiggy's quick-commerce arm, Instamart, is bleeding money, grappling with logistical hurdles and facing off against formidable rivals like Zepto and, of course, Zomato's Blinkit.

As Swiggy goes for IPO it is looking to expand into quick commerce where Zomato has already established itself as a leader, as it has with the food delivery business too. While the IPO itself is a step in the right direction, Swiggy has a lot of work cut out for it — with challenges in quick commerce where it’s already bleeding money and navigating an extremely competitive landscape.

CO:RELATION

Mood IndiGo Turns Sour

At some point last month, Interglobe Aviation, which operates India’s flagship airline Indigo, was about to become the most valuable airline stock in the world in terms of market cap. Over the past month, the company’s share price skid 14%. The company announced a loss for the quarter ended September 2024 for the first time in many quarters. The company blamed it on seasonality and competitive pressures on international routes. It is important to note that aviation turbine fuel prices are 20% lower than last year. That cost is usually about a third of airline revenue. India’s domestic and overseas passenger traffic is scaling record highs, according to the data published by the government. 

The company’s operational problems are creating trouble for the airline. Its CEO Pieter Elbers was quoted in a Bloomberg report saying that the number of planes kept on the ground due to issues with Pratt & Whitney engines should fall to less than 50 by March 2025, down from a peak of more than 70. A single plane can do five to six sorties in a day. If 70 planes are grounded, India cannot operate flights on at least 400 daily routes. That is a significant number even for the biggest airline in India, which operates 2,000 flights daily. At a time when the company needs to capitalise on the aviation boom, it is hurting.

CORE NUMBER

Rs 4.75 lakh crore

This is the Central government’s fiscal deficit at the end of the first half of the financial of 2025 or 29.4% of the budget estimates for the year. It was at 39.3% of the budget estimates during the same period last year. Government data showed that while receipts stood at Rs 16.37 lakh crore, expenditure was at Rs 21.11 lakh crore. The government has plans to narrow the fiscal gap to 4.9% of the GDP this financial year from 5.6% last year. 

FROM THE PERIPHERY

—🔌 Japanese automaker Toyota Motor Corporation is set to get its first fully battery-operated electric vehicle (EV), and it will be made in India. Business Standard reported that Suzuki will make the SUV at its plant in Gujarat. Toyota and Suzuki will make this vehicle under an original equipment manufacturer partnership, Toyota said in an exchange filing. “While continuing to be competitors, we will deepen our collaborations to address social issues, including achieving a carbon-neutral society through a multi-pathway approach," Suzuki president Toshihiro Suzuki was quoted as saying. 

—🛍️ India’s quick commerce boom is redefining shopping, with Zepto, Swiggy Instamart, and Blinkit leading the way. Now, Reliance is entering the race, tapping into its 3,000 supermarkets across 1,150 cities to fuel rapid deliveries through dedicated in-store kiosks. According to The Business Standard, with a product range topping 10,000 items, Reliance aims to outshine smaller players, offering 10-30 minute delivery times on JioMart and hoping to boost daily orders from 200,000 to 500,000—without new warehouses. Nykaa has also joined the quick delivery trend with Nykaa Now, offering beauty essentials within 10 minutes.

—🥤 Will your bottle of Coca-Cola now come cheaper? That’s what distributors of the beverage have told The Times Of India. This will be implemented in Tamil Nadu, Karnataka and Kerala, sources told the newspaper. The 400 ml PET bottle price will be reduced to Rs 20 from Rs 25. This is reportedly in a bid to compete with Reliance Industries-owned Campa Cola. Recently, the Indian market was flooded with several local brands — such as Lahori Zeera and Catch Jira Masala — offering fizzy drinks at cheaper prices. This has given tough competition to foreign brands like Pepsi and Coca-Cola. 

—📱 India’s smartphone market reached new heights in Q3 2024, with a 3% YoY boost in volume and a 12% value spike. Premium demand is soaring, as original equipment manufacturers (OEM) stocked up early for festival season, though sales started slower than expected, The Business Standard reported. 5G now dominates, claiming 81% of shipments. Vivo led in shipments, while Samsung topped value, closely trailed by Apple. Fast-risers included Nothing, with a whopping 510% YoY growth, and Motorola, posting an impressive 87% YoY increase.

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