Infibeam Incorporation Ltd, which will become the first e-commerce company to hit the Indian capital markets on March 21. While the move has raised hopes of other online companies following suit to raise funds through a public float, analysts said that it may not trigger the big names to go for an IPO anytime soon.

The reason: Not many e-commerce firms are profitable yet and an IPO may devalue their shares.

Sanjay Mehta, CIO, Indian Angel Network, said, “Infibeam’s IPO is mostly about getting an exit for its current investors and not really about raising money. There will be a few players who will take this route to raise funds but I don’t see that happening immediately. The bigger players are still to show some profitability,”

Gets SEBI nod

Infibeam had received a nod from market regulator SEBI for its initial public offering (IPO) to raise up to ₹450 crore last October. This comes at a time when venture capital and private equity firms are tightening their purses in general when it comes to investing in e-commerce firms. Many online firms are therefore looking at raising debt but no one is talking about raising public money yet.

“Infibeam is not funded by any major VC/PE entity. Therefore, correlating this to the current funding situation may not be right. But the VC/PE funding crunch is surely hitting some companies real hard. Those who did not know how to manage their firms in capital efficient manner have created a vehicle that they cannot suddenly run without guzzling money,” said Manish Kumar, Founder of Grex (a platform for early stage financing for unlisted start-ups)

Kumar added that Infibeam’s success may have sentimental impact on investors and their belief on the returns from such investments.

Venture Catalyst’s Founder Apoorv Ranjan Sharma said that Infibeam’s move to go for an IPO is not surprising given that the firm has a strong source of revenue and is the only cash-positive company in the ecosystem. “When you go for an IPO unit metrics play a very important role. One of the major differentiator is Infibeam provides complete online store (such as mobile applications, digital product catalogue etc) through its BuildaBazaar portal. Other players just provide listing of the products.”

He further added that being the first e-commerce firm to go for IPO, it is definitely the right time to tap the capital market as there is much headroom for the company to grow with just 11 per cent of Indian consumers shopping online currently.

Founded in 2010 by Vishal Mehta, an ex-Amazon executive, Infibeam is has been focusing a lot on its B2B e-commerce enabler platform BuildaBazaar.

Infibeam made profit in the first six months of the current financial year. It reported net revenues of ₹171.27 crore for the April-September 2015 period with EBITDA of close to ₹15 crore and net profit (adjusted for prior period items) of ₹6.5 crore.

It had clocked net loss of just under ₹10 crore for 2014-15.

The Ahmedabad-based company plans to utilise the proceeds to set up cloud data centre and shift its registered office to Gujarat International Finance Tec-City in Gandhinagar.

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