Vaibhav Gupta’s plan for Udaan’s journey to IPO
The IPO of B2B e-commerce platform Udaan has the potential to impress investors. In a chat with Business Standard’s Nivedita Mookerji, Udaan CEO Vaibhav Gupta tells us about his IPO plans and more
B2B start-ups | IPO | e-commerce
Q1: I’m going to start by asking you about the budget – takeaways from the EU budget? Something for the world of start-ups?
>The 2022 EU budget was a growth-oriented budget
>The budget emphasizes fundamental investments in the economy, including the digital economy Any indications from there?
> India’s IPO market, over the past nine months, has reached a milestone for startups in the country
>The public market shows appetite for digital companies that have a forward-looking view of the economy Q3: Udaan is heading for an IPO. You also made an announcement. Last year you said that in 18 to 24 months you would be going public. So how is the preparation going? Will it probably happen in 2023?
> Approximate timeline for IPO is 18-24 months for Udaan
>Udaan’s journey started with defining “kirana e-commerce” as a category in the country
>Constant progress on unit economics over last 4/5 quarters Q4: There have been a few starts recently, which haven’t been too good in the online space. Are there any concerns there?
>Global technology markets are becoming consumer markets
>People are looking for good quality tech companies with consistent performance and good fundamentals
>Markets reward companies appropriately based on their strengths and weaknesses Q5: You mentioned performance. By performance, do you also look at profitability? How does profitability fit into your scheme of things?
>Udaan architecture was designed for consumer e-commerce
>A fundamentally different e-commerce operating model was key to unlocking market potential
> Udaan pioneered a different operating model to leverage kiranas in India
>Kiranas in India are the channels through which the mass market consumes
>The performance for Udaan is to penetrate the mass e-commerce and ensure the good economy of the unit
> Udaan reaches nearly 3 million kirana retailers, all of which are pre-deployed distribution centers. Q6: I was looking at the numbers. Over Rs 2,400 crores in losses in FY21. So your losses are down, but you are still in losses. Revenues are up. Do you expect to break even soon?
>For Udaan, the first milestone concerns the unitary economy
>The next objective is to stimulate growth via maintaining the unit economy and exploring long-term capitalization opportunities of 35-40% per year
>Udaan’s journey now is to link growth and profitability to drive EBITDA profitability
> Navigate the path of balance between investments and the speed at which the market opens Q7: What is the valuation of Udaan at the moment?
>The company has made significant progress in core fundamentals over the past 24 months
>Number of monthly buyers increased by 60%
> Buyer monthly renewal rates have increased by 2,000 basis points or approximately 20% over the past 18-14 months
>Improving customer relations, direct relations with large and medium brands, having banking partners for Udaan’s lending activities
First published: Tuesday, February 15, 2022. 08:30 IST