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's CEO Vaibhav Gupta tells us about his IPO plans and more

Q1: I will begin by asking you about the Budget – any takeaways from the Union Budget? Anything for the start-up universe?Ans:

  • Union Budget 2022 was a growth-oriented
  • Budget emphasised on fundamental investments in economy, including the digital economy
Q2: Anything related to IPOs that you got from the Budget? Any indications from there?Ans:
  • Indian IPO market, over the last nine months, have achieved a milestone for startups in the country
  • Public market is showing appetite for digital companies that are taking a forward looking view of the economy
Q3: Udaan is headed for an IPO. You made an announcement also. Last year you said in 18 to 24 months, you will be going for an IPO. So, what’s the preparation like? Is it likely to come in 2023?Ans:
  • Timeline ballpark for IPO is 18 to 24 months for Udaan
  • Udaan’s journey started as defining ‘kirana e-commerce’ as a category in the country
  • Consistent progress on unit-economy over the past 4/5 quarters
Q4: There have been some debuts recently, which have not been too good in the online space. Are there any concerns there?Ans:
  • Overall tech markets are becoming mainstream markets
  • People are looking at good quality tech companies with consistency in performance and good fundamentals
  • Markets are rewarding companies appropriately based on their strengths and weaknesses
Q5: You mentioned performance. By performance, do you look at profitability also? How does profitability fit in your scheme of things?Ans:
  • Udaan architecture was made for mass-market e-commerce
  • A fundamentally different operating model of e-commerce was essential to tap the market potential
  • Udaan has pioneered a different operating model to leverage kiranas in India
  • Kiranas in India are the channels by which the mass market consumes
  • Performance for Udaan is about penetrating mass market e-commerce and ensuring to drive right unit economics
  • Udaan reach out to almost 3 million kirana retailers – all of which are forward-deployed fulfilment centres
Q6: I was looking at the numbers.

More than Rs 2,400 crore worth of losses that was FY21. So, your losses are down, but you’re still in losses. Revenues are up. Are you looking at a break-even anytime soon?Ans:

  • For Udaan, the first milestone is around unit economics
  • Next focus is to drive growth via maintaining unit economics and explore long-term compounding opportunities of 35-40% y-o-y
  • Udaan’s journey is now about tying growth and profitability together to drive EBITDA profitability
  • Navigate the path of balancing investments vs speed at which the market is opening up
Q7: What is the valuation of Udaan right now?Ans:
  • The company has made material progress in core fundamentals over the past 24 months
  • Number of monthly buyers grown by 60%
  • Monthly repeat rates of buyers grown by 2,000 basis points, which is about 20% over the past 18-14 months
  • Improved on client relationships, have direct relationship with leading and medium brands, have banking partners for Udaan’s lending business

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