Online bus booking space is in top gear! After hitting the brakes during COVID-19, IntrCity SmartBus is now on the path to profitability, says Kapil Raizada, the co-founder of IntrCity. After achieving operational profitability in the third quarter of FY2022, the online bus booking company is eyeing consistent profitability in the coming quarters.

Share Market Live

NSE

“Margins will see a huge improvement in times to come,” said Raizada. IntrCity SmartBus registered nearly a 200 percent increase in annual revenues with December revenues touching $40 million annual recurring revenue (ARR). “We are expecting over 300 percent year-on-year growth in 2023, with an improved market share on existing routes and a few new routes introduced," he said.

IntrCity SmartBus caters to travellers from around 700 cities from 45 pairs of hub and spoke cities. “We are planning on adding 150 new routes and adding 2,000 new buses in the next three years.” Raizada said, adding that, “Of these new buses, 50-100 vehicles will be electric ones in the next three years. But, we will have a few EV buses commercially run in the next few months.”

But what is more exciting for players like IntrCity SmartBus is the renewed interest by investors — foreign and domestic. “Investors who understand the mobility space — especially public transport – are engaging with us.” While players like IntrCity SmartBus follow an asset-light model, it does understand it may need strategic investors who will help the company in its next leg of growth.

According to a report by PGA Labs, the outstation bus market was $30 billion dollars in FY20 and is expected to grow at 9.8 percent CAGR from FY20-25 — expected to be $48 billion dollar. “The online outstation bus market is $1.25 billion in FY20 (5 percent of the overall market) and expected to be $4.6 billion (10 percent of the overall market) growing at 31 percent CAGR from FY20-25," it stated.

Also Read: Yogesh Patel resigns as chief financial officer of Mahindra Logistics

The report said around 18 percent of $66 billion outstation rides across all modes are booked online as against only 5 percent of outstation private bus bookings are online. So, the potential for this market is huge.

“No doubt, the intercity space is heating up,” Raizada said. While international markets have seen strong consolidation over time in the intercity bus market, it would be the same for overall online bus booking space in the country. “In the next three years, there will be consolidation in the space and only the top 3 players will survive,” he added.

Raizada said that the demands of the new generation are evolving and businesses that don't cater to those requirements will find it difficult to survive. He added that today travellers look for an improved experience, including more updates on their journey, safety, hygienic environment, and extended last-mile connectivity among other needs.

IntrCity SmartBus has over 2 lakh bookings per month. "Half of our customers are repeat customers," Raizada said. While IntrCity RailYatri started its journey in 2011 and IntrCity SmartBus was launched in early 2019. “We have over 1.5 crore (rail) bookings every month using IntrCity RailYatri.” Raizada explained, adding, “Having such a large customer base (of IntrCity RailYatri) helped us scale our IntrCity SmartBus much faster.”

He said often railway routes are overbooked, leaving travellers in a dilemma. So, initially, IntrCity SmartBus was started to cater to just those travellers who were looking for other options, but now, it has new customers who prefer the bus over rail. “While highways were built at a fast pace, railway infrastructure did not match that pace. This is what has worked in favour of not just bus service operators but other modes like 4-wheelers used for intercity movement," he said.

Also Read: RBI imposes monetary penalty on Rajkot Commercial Co-operative Bank over rule violation