Who is leading the IPO giant as it heads towards profitability?

Wiggy doesn’t shy away from experimentation – from products like SuprDaily, InsanelyGood, Scootsy and Swiggy Mall to numerous changes to its subscription/loyalty programmes and new food delivery segments.

The new Swiggy—the one that will hit the IPO table in 2024—is about more than just food delivery. Instamart and quick commerce have taken center stage. Other services are becoming equally critical to long-term profitability.

And even within Swiggy, there is a lot of optimism about its fortunes. After an 80% increase in Zomato’s share price in the last six months, Swiggy has revised its IPO size from the originally planned $1.25 billion to $1.4 billion.

The company, initially set to raise $450 million through a fresh issue, will now issue $600 million in fresh shares, while maintaining the offer for sale as planned. This makes Swiggy’s IPO the fourth-largest IPO on Indian exchanges, after LIC, Paytm and Coal India. And of course, all eyes are on the food delivery and fast-paced retail giant.

And the role of key people leading the various verticals will be equally critical to the success of the IPO and beyond. Alongside co-founders Nandan Reddy and Phani Kishan, co-founder and CEO Sriharsha Majety has built a team that includes many seasoned professionals from the world of e-commerce, consulting and technology products.

Swiggy Universe: Food delivery is king

It should come as no surprise that Swiggy’s food delivery sector is the dominant revenue driver, accounting for over 81% of the company’s gross revenue, followed by Instamart, which generated INR 1100 Cr and accounted for around 10%.

Swiggy’s food delivery business grew 17% to INR 6,100 Cr in FY24. Compared to Zomato’s food delivery revenue of INR 6,161 Cr, Swiggy is neck and neck with its arch rival. But Zomato-owned Blinkit posted INR 2,301 Cr in revenue, more than double that of Swiggy.

The only positive is that Swiggy has reduced its losses by 44% from INR 4179 Cr to INR 2350 Cr. This reflects Swiggy’s improving financials and path to profitability ahead of the IPO. With the company expected to file its RHP with SEBI by the end of this month, it is important to investigate who is responsible for taking the food delivery and fast-paced retail giant public.

On the food delivery side, co-founders Majety and Reddy oversee overall product innovation and direction of the company. In August 2022, Swiggy appointed former OYO India CEO Rohit Kapoor as the head of the food market segment.

Interestingly, Kapoor has over two decades of experience in sales and finance across corporates and companies like Max India and McKinsey & Company. Before OYO, he also served as CEO of India and Southeast Asia operations and later as Global Chief Marketing Officer.

Since Swiggy is not in the consumer services business, it is banking on Kapoor’s experience to achieve profitability in food delivery by fiscal 2025.

Another key executive is Tapojoy Chatterjee, vice president and head of product, and his role overlaps with those in other verticals, given Swiggy’s single-app approach, unlike Zomato and Blinkit.

Kapoor and Chatterjee also oversee the Dineout business, which Swiggy acquired in 2022 and which is likely to be an important focus for Swiggy in the future if Zomato is successful Scaling the District and his own entertainment activity.

On the fast-paced front

The quick commerce (QC) market is set to outgrow the online food delivery sector, already exceeding 50% of its size by 4QCY23, according to JM Financial. QC growth is expected to continue, driven by a broader addressable market and high customer satisfaction. In contrast, the food delivery market growth is expected to remain modest at around 20%, with QC potentially surpassing it in the next 3-4 years.

Swiggy, like Zomato, Zepto and BigBasket, is betting big on QC. Reports suggest that Swiggy plans to use a significant portion of the funds from its upcoming IPO to expand Instamart.

The company plans to double its network of dark stores, which deliver groceries and household goods, to more than 1,000 locations over the next four years, expanding its presence in various cities. The new dark stores are expected to be larger to meet the needs of the non-grocery category, a key factor for profitability in fast-paced retail.

Interestingly, Blinkit aims to reach 1,000 stores by FY25 and double that number next year. So Swiggy is looking to go head-to-head with Zomato again, even as Zepto rises as a challenger.

In September 2024, Swiggy appointed Amitesh Jha, an IIT Delhi and IIM Ahmedabad graduate with 14 years of experience at Flipkart, as CEO of Instamart. Instamart was previously led by co-founder Kishan.

One clue to Jha’s purpose comes from CEO Majety’s statement at the time of his appointment. “His extensive experience includes leading key categories like smartphones, consumer goods, fashion and large appliances, as well as managing the logistics function,” the co-founder said in September when Jha joined the company.

Just last month, the company appointed Sairam Krishnamurthy, former head of sourcing and marketing at Ola, as chief operating officer of Instamart.

Apart from the C-suite hire, Swiggy has strengthened its product and management layer for Instamart by hiring Himavant Srikrishna Kurnala as head of product for Instamart, Mayank Rajvaidya as vice president, fruits and vegetables, and Manu Sasidharan as vice president, FMCG categories. Other key leaders at Instamart include Abhishek Shetty, who heads marketing, and Anirban Roy, vice president, categories, revenue and growth.

Dipak Krishnamani, a former Amazon India and Marico employee, heads Swiggy Mall, the non-food category within quick commerce.

This will be the most important part of Swiggy’s organizational structure, given how significant Instamart is from a revenue perspective. Interestingly, while Blinkit — a part of Zomato — grew 3x in FY24, increasing its revenue from INR 809 Cr in FY23 to INR 2,301 Cr in FY24, Swiggy’s Instamart is struggling to keep up with its competitors.

Even though Instamart was an early entrant into the quality control space, its revenue in fiscal 2024 was just INR 1,100 Cr, behind Blinkit and Zepto, both of which had revenue of over INR 2,000 Cr.

Moreover, Swiggy now has to compete for revenue share with the likes of BigBasket and Flipkart. The company cannot afford to be left behind in the fast-paced commerce race as it is the largest potential contributor to revenue in the long run.

Swiggy’s Dineout needs more power

Finally, we have Dineout, Swiggy’s food ordering platform, which it acquired in 2022 for $120 million.

Initially led by co-founder Ankit Mehrotra after the acquisition, it has been led by Rohit Kapoor since June 2023. Kapoor has been tasked with unlocking revenue streams for Dineout and works closely with the product and development teams.

The company has plans for this product as well, adding table reservations to discounts and rewards as a way to attract more users and generate more revenue.

In FY2024, Dineout reported a 98% YoY growth in Gross Order Value (GOV) reaching INR 2,200 Cr, as compared to INR 1,100 Cr in FY2023. Adjusted EBITDA also improved, declining from -12.4% in FY2023 to -8% in FY2024.

The company attributed the growth to higher commissions, advertising fees, user fees, and additional revenue from selling tickets to events on the platform. Dineout competes with platforms like Zomato, EazyDiner, BookMyTable, and others.

Post-COVID, the restaurant table booking industry in India has undergone a transformation. Both Swiggy and Zomato are now focusing on offering more than just table bookings, expanding into the reservation experience.

Many restaurants are now hosting live events, which allows bookings to go beyond lunch or dinner, further increasing the platform’s scalability. This has opened up opportunities for Swiggy and Zomato to capture more revenue from users in the foodservice space.

Zomato once again overtook Swiggy in the race and acquired Paytm’s live ticketing business in a deal worth over INR 2000 Cr. Will Swiggy also jump into the mix with both feet?

But Dineout as a product itself looks a bit pale compared to what Zomato has planned. Will Swiggy try to strengthen this vertical in the next few months? There are signs of that.

In September 2024, Dhruvish Thakkar was appointed Vice President, Revenue and Growth, Swiggy Dineout. Thakkar is another former Flipkart executive who has joined Swiggy, and led the growth of fashion, beauty, social commerce, gaming, and healthcare categories at his previous employers.

Sriharsha Majety steps down from the limelight

Hiring leaders across verticals is key for Swiggy ahead of a potential IPO. Not only does it add a wealth of relevant industry experience to the company’s leadership, but their experience in scaling retail and e-commerce giants like Flipkart will be key for Swiggy in the long run.

Interestingly, with various new leaders in place over the past year, Swiggy is preparing for life as a public company, where CEO Sriharsha Majety can’t take over the show entirely, as he has done for the past decade. As a result, Swiggy is building depth in layers of leadership and management across food delivery, quick commerce and eat-out.

The biggest challenge for this group of leaders will be profitability. While Swiggy may not match Zomato in terms of valuation at the time of IPO, that is not really the attractive part for investors. All eyes will be on whether Swiggy has figured out the formula to get out of deficit and into profits.

Only then will the scale that has been built over the years become significant.

Naturally, the spotlight is on the people and leaders who have guided Swiggy to the IPO pole and beyond. Can they steer the Swiggy ship to the right bay at this critical juncture for one of India’s most prominent startups?

(Edited by Nikhil Subramaniam)