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

Topics
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? Responnse :

  • The 2022 EU budget was focused on growth
  • Budget focused on fundamental investments in the economy, including the digital economy

Q2: Anything related to IPOs that you got through the budget? Any directions from there? Responnse :

  • 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 taking 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? Responnse :

  • Approximate IPO timeline is 18-24 months for Udaan
  • Udaan’s journey started with defining “kirana e-commerce” as a category in the country
  • Steady progress of the unit economy over the last 4/5 quarters

Q4: There have been a few debuts recently, which haven’t been too good in the online space. Are there any concerns there? Responnse :

  • Global technology markets become 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? Responnse :

  • Udaan architecture was designed for consumer e-commerce
  • A fundamentally different e-commerce business model was essential to unlock 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
  • For Udaan, performance is about penetrating mass e-commerce and ensuring the right unit economy
  • Udaan caters to 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?

Responnse :

  • For Udaan, the first step concerns the unitary economy
  • The next goal is to drive growth by maintaining the unit economy and explore 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 Udaan’s valuation at the moment? Responnse :

  • The company has made significant progress in core fundamentals over the past 24 months
  • The number of monthly buyers increased by 60%
  • Buyer monthly renewal rates have increased by 2,000 basis points, or about 20%, over the past 18-14 months
  • Improve customer relations, have a direct relationship with large and medium brands, have banking partners for Udaan’s lending activities

Watch the video

https://www.youtube.com/watch?v=Tu-aSrvAHqA

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First published: Tuesday, February 15, 2022. 08:30 IST

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