Tata-Backed Bigbasket Aims for 2025 IPO Following $200 Million Investment

The Tata Group's Bigbasket is expected to go public within three years, following its most recent capital raising which valued the company at $3.2 billion. This makes it India's largest online grocer.

The successful e-commerce business, which is broadening its presence across India and produces around $1.4 billion in yearly income, may opt to launch an initial public offering in the next two to three years, according to Chief Financial Officer Vipul Parekh in an interview on Wednesday at the company's headquarters in Bengaluru. The company, which declared this week that it had raised $200 million, is open to obtaining more private capital before it goes public, he added.

Parekh declared that they would eventually go to public markets. He added that the ideal time to access capital markets is when a business is stable and growing, and when there is a reasonable assurance of future success and increasing profitability, as the markets can be unforgiving.

Recent technology IPOs in India have not been as successful as expected, with investors expressing worries about valuations, increasing interest rates, and profitability. Companies such as Paytm and Nykaa are attempting to stop the decline in stock prices, which highlights the importance of Bigbasket solidifying its business model before going public.

Bigbasket, which holds a third of India's online grocery market, was taken over by Tata last year. The 154-year-old conglomerate is trying to keep up with industry giants such as Amazon.com Inc. and Reliance Industries Ltd., owned by billionaire Mukesh Ambani, who are attempting to attract Indian customers with speedy deliveries and discounted prices.

Founded in 2011 by five individuals, including 58-year-old Parekh, Bigbasket will use the newly acquired funds to strengthen its e-commerce division and extend its reach across the nation in order to solidify its position as a leader.

A group of entrepreneurs who had experienced the dotcom crash of the early 2000s used their knowledge to build a successful startup in India. This venture has now grown to a staggering $950 million. It is a remarkable success story of resilience and determination.

Bigbasket plans to expand its BB Now service, an unprofitable quick commerce format that offers deliveries of household staples within 30 minutes, from 200 to 300 outlets by the end of March.

Parekh noted that a significant amount of their capital expenditure is being used to construct their dark stores. He also predicted that BB Now would likely become profitable within a period of six to nine months.

Online grocery sales in India are one of the fastest-growing segments in the country's $1 trillion in yearly retail spending, despite only accounting for 2% of all grocery sales. India is leading other markets in the adoption of fast delivery, with Sanford C. Bernstein estimating that quick commerce's share of online grocery sales is 13%, compared to 7% in China and 3% in Europe.

At the beginning of this year, many of Bigbasket's competitors reduced or slowed down their expansion into services that provide speedy deliveries, although they are costly. Some of these services even guarantee delivery within 10 minutes.

Parekh commented on the recent surge in quick commerce, noting that customers are enthusiastic about it. He added that, due to their extensive experience in the grocery industry, they have a good understanding of where the demand lies based on their data.

In India, grocery delivery services are rapidly increasing in speed and frequency. Companies are investing heavily in this area, burning through cash in order to provide customers with ultrafast delivery.

Bigbasket is aiming to increase its presence to 75 cities by the end of March, which is a 20 city increase from the current 55. Over the next year, the company is looking to add between 80 to 100 towns to its current total of 450. Additionally, Bigbasket is running a pilot program with around a dozen physical stores, which are branded as Fresho.

Parekh commented that the top 10 metropolitan areas have achieved a reasonable level of penetration, but that there is still much more to be done in the rest of the country.