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Online grocer bigbasket is targeting an initial public offering of its shares in 2025, Chief Executive Officer and co-founder Hari Menon said.
“Probably 2025 is the date. We are leaving this to the Tatas, but I think we are gunning for 2025,” Menon told businessline on the sidelines of an event to launch a frozen food line in collaboration with celebrity chef Sanjeev Kapoor.
Next year is set to be a busy year for the Tata group, with group holding company Tata Sons and Tata Capital set to launch IPOs having been classified as upper-tier NBFCs according to Reserve Bank of India guidelines.
The grocery platform is expected to end FY24 with revenues in the region of $1.5 billion while expecting to become profitable in the next 6 to 8 months, Menon said.
Menon said that the capital requirements were much lower than what they had been earlier. “We don’t need as much money as we needed five years ago ..its come down quite a bit,” he said, adding that the business still required capital. He indicated that the IPO would consist of fresh and a secondary issuance.
In 2021, Tata Digital acquired over 64 per cent of its stake, with investors such as the Alibaba and Actis exiting. There are PE firms such as UK’s CDC Group and Silicon Valley’s Bessemer Venture Partners that hold minority stakes in it.
Profitability
Out of bigbasket’s three business lines - bb daily, the slotted business and bb now - the first two are already stable and profitable, while the third bb now, the quick commerce vertical, is expected to be profitable in the next 6 to 8 months, as it was rapidly growing.
For the platform as a whole, the average order value was ₹1,300-1,400. “That’s what gives us the profitability,” he added. Around 70 per cent of its revenue is from slotted deliveries (where customers can specify specific time slots for delivery). The default delivery time is 2 hours.
The frozen food line Precia launched today is part of the platform’s private label business, from which it derives over a third of its revenues. The contribution of private labels is expected to rise to and stabilise at 40-45 per cent in the next two years, Menon said.
The Precia range is expected to generate ₹100-150 crore revenue by 2026. It consists of frozen peas, mixed vegetables, frozen snacks and sweets.
Menon said that their strategy was to have differentiated products, and while private labels tended to be cheaper in general, “in our case, they are not cheap.”
At present, there are no plans to sell the Precia range offline. The company is experimenting with omnichannel distribution strategies and has opened up some physical stores on a pilot basis in Bengaluru, which serves as dark stores for both online sales and physical shopping.
The platform currently has around 400 dark stores, and there are no plans to add too many, as density is more important.
On whether the platform will add more non-grocery items to its range, Menon said it was a grocer with a dominant share in the online space. It does sell household appliances as well as electronic accessories that “are adjacent to grocery” but selling anything larger would require a different strategy.
“We are not chasing the larger horizontal e-commerce space because we are a vertical grocer and we want to remain there,” Menon said.
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