Bigbasket aims to go for IPO by 2023, cross Rs 7,000 cr in revenue in FY21

Online grocery firm Bigbasket aims to go for an initial public offering (IPO) by 2023, by when it strives to have Ebitda-positive financials.

Ebitda, or earnings before interest, taxes, depreciation, and amortisation, shows the operating and is an important parameter as it depicts the health of a business and whether it is able to generate cash after meeting its operational expenses.

Bigbasket requires another round of funding “which should be the last one” to achieve the target, said Hari Menon, co-founder and CEO of the firm.

Menon said Bigbasket is likely to become “contribution margin-positive” by July. This means it will be able to manage all costs (expect corporate costs) above-the-line marketing expenses that are incurred on account of newspaper and television advertisements. 

“From contribution margin-positive, we intend to become Ebitda-positive and should achieve that between FY22 and FY23,” Menon told Business Standard.

The company has become contribution margin-positive in several cities where it is present. With the core grocery businesses already starting to generate cash, it has reduced dependency on external funding. Menon said that by July-August, Bigbasket will raise another round.

While he refused to disclose figures, people in the know said it could be in the range of $150-200 million.

“Hopefully, the round in July-August should be our last, and we could seriously consider an IPO after that. I would say we should be IPO-ready in another three years,” said Menon.

Bigbasket expects to close the current financial year (FY20) with a top line of Rs 5,000 crore. In FY22, it hopes to hit the billion-dollar mark with revenue of Rs 7,000 crore.

In a bid to achieve profitability, Bigbasket has decided not to expand into newer cities, and will instead focus on existing markets.

The Alibaba-backed firm is present across 24 cities, while the top 10 account for 85 per cent of its revenues.

“We are very clear that from an expansion point of view, we are pretty much done. This is because grocery is such a huge market, and the idea is to go deeper than spread yourself thinner,” added Menon.

Bigbasket is already serving cities like Kanpur from its Lucknow base, Chandigarh from Ludhiana, Anand from Baroda, and Guntur from Vijayawada. “That is the only expansion we will do, which is as good as extending the boundary,” said Menon. Over the next couple of months, the firm plans to add several other cities, such as Allahabad and Faridabad.

In terms of products, it is still in investment mode in BB Daily — the milk subscription business launched 7-8 months ago. With an average order size of around Rs 100, BB Daily is nowhere close to the core Bigbasket grocery business, where the average order value stands at Rs 1,500. However, it holds immense potential in terms of volumes, said the company.