Swiggy IPO: Key Insights on Business Model and Revenue Streams

One of the popular food delivery platforms in India, Swiggy IPO is one of the anticipated IPOs in India in 2024. 

Swiggy IPO opened for subscription today November 6, 2024, and closes on November 8, 2024. The shares are expected to be listed on Wednesday, November 13, 2024, on both BSE and NSE.

Swiggy IPO price band is set at ₹371 to ₹390 per share. The minimum lot size for an application is 38 Shares. The minimum amount of investment required by retail investors is ₹14,820. 

While the Swiggy IPO is drawing several investors’ attention, before investing in it, it is important to understand the business model of the company and its revenue streams. 

Business Model of Swiggy

Swiggy operates on a hyperlocal food delivery model, facilitating the delivery of food from restaurants to customers’ doorsteps. The company connects users with a wide range of restaurants, enabling them to place orders through a user-friendly app. Swiggy’s business model is centred around creating value for customers, restaurant partners, and delivery partners.

Swiggy’s business model extends beyond food delivery, offering a wide range of services to cater to various customer needs. In addition to delivering restaurant meals, Swiggy allows users to order groceries and household items through Instamart, which are delivered via its on-demand delivery network. The platform also facilitates restaurant reservations via Dineout and event bookings through SteppinOut. 

Swiggy’s Genie service enables customers to send products for pick-up or drop-off, while Swiggy Minis supports other hyperlocal commerce activities, creating a comprehensive ecosystem that integrates food, groceries, services, and more into one platform.

Revenue Streams of Swiggy

Swiggy generates revenue through multiple streams, contributing to its overall growth trajectory. The major revenue streams are as follows:

• Restaurants Partners

The primary revenue model for Swiggy is the commission it receives from restaurant partners for each order placed through its platform.

Revenue from Swiggy’s Food Delivery business primarily includes pre-agreed commissions from restaurant partners, advertising revenue from these partners, fees charged to users and delivery partners for accessing the technology platform, and fees for additional business enablement services provided to restaurant partners.

For the period ending June 30, 2024, and 2023, Swiggy’s revenue from this segment was ₹15,153.40 million and ₹11,926.12 million, respectively. Additionally, for the fiscal years 2024, 2023, and 2022, the revenue from operations was ₹51,601.25 million, ₹41,299.90 million, and ₹33,913.14 million, respectively.

• Out-of-Home Consumption Business

The out-of-home consumption business includes Swiggy Dineout and SteppinOut businesses. Revenue from Swiggy’s Dineout business includes commissions agreed upon with restaurant partners, recently introduced advertising revenue from restaurant and brand partners, and fees charged to users for accessing the technology platform.

For SteppinOut, revenue is generated from ticket sales on various platforms, advertising revenue from brand partners, and fees for additional business enablement services provided to both restaurant and brand partners.

Swiggy entered the Out-of-Home Consumption business in FY 2023 through the acquisition of Dineout. Revenue from this segment was ₹458.52 million and ₹311.25 million for the three months ending June 30, 2024 and 2023, respectively, and ₹1,571.86 million and ₹776.86 million in Fiscal 2024 and 2023, respectively.

• Quick Commerce

Revenue from Swiggy’s Quick Commerce business includes pre-determined commissions from merchant partners, advertising revenue from brand partners, fees charged to users and delivery partners for utilising its technology platform, and fees for additional business enablement services offered to merchant partners.

Quick Commerce represents Swiggy’s second-largest business segment, with revenue from operations reported ₹9,785.50 million, ₹4,513.63 million, and ₹828.43 million in financial years 2024, 2023, and 2022, respectively.

• Supply Chain and Distribution

In Supply Chain and Distribution, the company’s revenue consists of the sales of goods to wholesalers and retailers, revenue from supply chain clients for supply chain management services, and other business support services. Swiggy serves as an authorised distributor for prominent brands in India and aims to expand through additional partnerships.

• Swiggy One

Swiggy offers an exclusive membership, Swiggy One. 

Swiggy One generates revenue through subscriptions, offering members exclusive benefits. As of FY 2024, the members registered for Swiggy One are 5.33 million, which grew from 1.39 million in FY 2023. 

Conclusion 

With its ongoing expansion into new verticals and an ever-growing customer base, Swiggy is poised for continued growth, solidifying its position as one of India’s most popular food delivery platforms. As Swiggy IPO is already open for subscription and the company prepares for its upcoming listing on the stock exchanges, investors are expected to closely monitor its progress and growth trajectory.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.