Swiggy eyes 100 mn users, each ordering 15 times a month: CEO Majety

Food delivery giant anticipates strong growth in next decade

Swiggy expects 100 million consumers to use the platform 15 times a month in the future as it sees the food delivery business to be more profitable in the next decade, the company’s co-founder and chief executive officer Sriharsha Majety said on Monday.

 

The Bengaluru-based firm is gearing up to launch its Rs 11,327 crore initial public offering (IPO) on Wednesday.

 

The food delivery business is at a meaningful scale today and is expected it to grow at a compound annual growth rate (CAGR) of about 20 per cent, Majety said.

 

“Coupled with the improvements in the unit economics and operating leverage thereafter, it is a beautiful compounding business over the next 1-2 decades. It would become very large based on the back of the user base expansion that would happen,” he told reporters.

 

 

The country’s consumption growth, GDP (gross domestic product) per capital and women participation in the workforce indicate the food delivery business would be larger and more profitable in the future, he added.

 

“We definitely think about the world, where there are 100 million users using us 15 times a month,” said Majety.

 

He said the next phase is to scale up the services of the company and cater to a consumer base of 300-500 million expected to grow over the next one or two decades.

 

“Today everything we do serves the top 150 million consumers in the country. And if we go into the 1-2 decades and believe the GDP per capita of the country, it is going to be a 300-500 million user consumer base that we would be catering to," said Majety.

 

“Every year new users fall into the (part) of the pyramid that we operate in. Every year we are piloting to see things that belong to the future. Some of them do work. Every three years, one of the things that we do manages to capture the imagination of the consumers at scale. Hopefully, we keep doing what we are doing to unlock new consumption and new categories in the next few years,” he said.

 

Swiggy also believes quick commerce will be its future growth engine and anticipates that it will outpace its core food delivery business over the next five years. Currently, the quick commerce business of Swiggy — backed by Prosus and SoftBank — is 40 per cent of the size of its food delivery revenues.

 

Majety sees a significant market opportunity potential for quick commerce, projecting a total addressable market (TAM) of about $30 billion and $50 billion by 2028.

 

“It is a generational opportunity and we are in just the first few minutes of the game here. Consumer preference and needs are getting developed and emerging,” said Majety.

 

When asked about expanding quick commerce services to Tier-II and Tier-III cities, Majety said the firm already provides such services in over 30 non-Metro cities. Swiggy customises its quick commerce offering based on each location’s unique needs.

 

“We would be expanding into more cities. There is a lot more depth that we can go after. Each new city gives us feedback about how much deeper we can go,” he said.

 

Swiggy was founded by Birla Institute of Technology & Science Pilani alumni Sriharsha Majety and Nandan Reddy and Indian Institute of Technology Kharagpur graduate Rahul Jaimini in 2014. Majety had quit his job as a banker at Japan's largest investment bank Nomura. He then went on a backpacking trip on a bicycle to Europe and founded a logistics platform for online retailers after returning to India. But he shut down that company.

 

Swiggy Limited proposes to open its IPO on Wednesday.  The bid or offer closing date will be on Friday.

 

Swiggy's IPO consists of a fresh issue of Rs 4,499 crore and an offer for sale of 17.5 crore shares. The issue is likely to be priced between Rs 371 and Rs 390 per share. At the upper end of the expected price band, the company is looking to raise Rs 11,327.4 crore from the issue.

 

The firm reported a 36 per cent year on year increase in its operating revenue for FY24 to Rs 11,247 crore. This was driven by strong growth in its quick commerce vertical Instamart and out-of-home consumption business. It reduced its net loss for the year to Rs 2,350 crore, 44 per cent lower than a year ago.

 

“The continued scale-up in the recent years is driven by an upward momentum witnessed in demand and supply side factors with about 14 million users transacting on our platform at a high frequency of about 4.5x, supported by our wide delivery network of over 390,000 delivery partners,” the company said in its annual report.