BigBasket eyes profitability in next 6-8 months, IPO in 2025: Hari Menon

Online grocery firm BigBasket is planning to come out with an initial public offering (IPO) in 2025 after turning profitable.

Part of Tata Digital, the firm will turn profitable in another 6-8 months once the newly-launched ‘BB Now’ vertical turns profitable, its co-founder and chief executive Hari Menon told reporters in Mumbai. Menon was talking to media at the launch of Precia, a private label launched in collaboration with celebrity chef Sanjeev Kapoor.

Menon hinted that the issue will include both primary and secondary share sales, but did not reveal any further details.

In 2022, the firm was valued at $3.2 billion after a fundraise of $200 million from Tata Digital.

When asked about IPO plans, he said, “We will probably have it in 2025. But we are leaving it to the Tatas. There cannot be anybody better to guide and advise us on that.”

While speaking on raising funds, Menon said that the business requires capital for ongoing investments, which may be raised from the Tata Group in the run-up to the IPO. He added that bulk of the investments is in technology, marketing and people. He also added that the requirment of funds has come down as the business has matured over years.

The company is targeting to close FY24 with a revenue growth of 30-35 per cent over the previous financial year, with a top line of about Rs 12,000 crore ($1.5 billion), Menon said.

On profitability, he said the enterprise will turn profitable in the next 6-8 months, once BB Now, under which it delivers products in 10 minutes, turns profitable. He added that older business lines, including slotted and BB Daily, are in the black.

At present, over 70 per cent of its revenues come from the slotted business. The relatively-new BB Daily, under which it delivers items like milk and non-milk products early in the morning, and BB Now, account for the remaining 30 per cent, Menon said. 

He also clarified that unlike BigBasket’s competitors, the company is not planning to enter the broader e-commerce space.

“We are a grocer and want to remain in the food and grocery space, and be a dominant player. In the quick-commerce segment, we may add a few products like accessories and electronics, which even a grocery store keeps,” he added. For BigBasket the average order value is in the range of Rs 1,300-1,400. 

When asked if quick-commerce for BigBasket will become a larger pie as many in the segment have seen good traction, Menon said that for the company the slotted category of delivery will be the driver.

“We have seen that people prefer to choose slots. When we recently rebranded slotted delivery to BB Supersaver, people were happy with same-day delivery. Our customers prefer slotted delivery. While we have made two hours a default choice, I believe that people will prefer slotted than two-hour delivery,” he added.

It is currently piloting the concept of having an offline presence to try out the omni-channel format, Menon said. The offline stores called Fresh’O’ will serve both slotted delivery and BB Now as well as walk-in customers.

BigBasket and chef Sanjeev Kapoor on Tuesday announced the launch of a new brand in the frozen food category called ‘Precia’.

Menon said it is targeting sales of Rs 100-150 crore from Precia by 2026, and will be focusing on marketing the products. They include items like momos and desserts.

Over 36 per cent of its current sales come from private labels, Menon said. He added that the company is aiming to take the higher margin business’ contribution to 40-45 per cent in the next two years.

The frozen food segment is projected to touch $4.5 billion in the next five years, at a compound annual growth rate (CAGR) of 16 per cent.

When asked about the traffic coming from the Tatas’ super app, Menon declined to comment.

He also declined to comment on working under Tata Digital’s new chief executive and managing director Naveen Tahilyani, saying it is still early days to comment.

On some reports, which stated that he will be leaving the company before takeover by the Tatas, Menon said there is no such plan.