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Imagine this scenario: It’s a leisurely Sunday afternoon, and you’re shopping on BigBasket, adding staples like bananas and milk, along with some tempting organic almonds you had decided to avoid. Just as you prepare to check out, a notification pops up—not the typical “Hurry! Limited stock!” but a significant announcement: BigBasket is going public.
Indeed, the Tata-backed grocery giant is gearing up for an IPO within the next 18 to 24 months, stirring excitement akin to the freshness of the produce they deliver. With over a decade of experience providing essentials from wheat flour to avocados, BigBasket is now poised to give investors an opportunity to own a piece of its journey.
Will this IPO facilitate a smooth ascent to market leadership, or will it face challenges similar to others in the e-commerce sphere? Let’s delve into this topic.
BigBasket is a well-known entity in the online grocery sector. It has navigated initial skepticism—remember the query, “Who buys vegetables online?”—survived intense competition, and evolved from a basic grocery delivery service to a comprehensive supply chain powerhouse. So, what drives the decision to IPO at this point? Consider the following factors:
Market Growth: India’s online grocery market is thriving and is anticipated to reach $25 billion by 2027. Increasingly hectic lifestyles, traffic challenges, and the convenience of home deliveries are prompting consumers to favor app-based shopping over traditional grocery experiences.
Intensifying Competition: The grocery market has become a highly competitive arena. Rivals such as Blinkit, Zepto, Amazon Fresh, and Reliance are competing fiercely for customer loyalty with promises of rapid delivery, attractive pricing, and diverse selections. An IPO would enable BigBasket to secure the capital necessary for aggressive expansion, improved logistics, and a bid for market dominance.
Support from Tata Group: Since Tata acquired a majority stake in BigBasket in 2021, the company has been eyeing greater opportunities. With Tata's financial backing and industry expertise, going public seems a logical next move.
BigBasket anticipates closing FY25 with revenue of ₹12,000 crore and FY26 with revenue between ₹15,000 and ₹15,500 crore. The company is aiming for an annual revenue run rate of $3 billion and a positive EBITDA margin of 4-5% by the time of the IPO.
The IPO will launch in a market where Swiggy and Zomato have already made their public debut, with heightened investor scrutiny on profitability. BigBasket’s commitment to sustainable growth and solid unit economics directly addresses this landscape.
BigBasket is experimenting with physical stores in Bengaluru, which serve the dual purpose of dark stores and retail outlets, although this is not yet a primary focus.
The company aims to escalate its dark store network to 700 locations, including tier II–IV cities, to support quick commerce and broaden its reach.
BigBasket is enhancing its platform by integrating offerings from various Tata brands such as Croma, Tata Cliq, 1mg, Zudio, and CaratLane, with plans to soon include prescription medications on its site.
The average order value stands at ₹1,300–1,400, with 70% of revenue derived from slotted deliveries. Cash-on-delivery continues to dominate as the preferred payment method within the sector.
For investors keen on entering the expansive e-grocery market, BigBasket’s IPO offers several enticing advantages:
Established Brand Reputation: Unlike many emerging e-commerce ventures that expend considerable resources on customer acquisition, BigBasket has built a loyal customer base over the years.
Pathway to Profitability: Despite many quick-commerce competitors facing profitability challenges, BigBasket is implementing a more structured approach to grocery delivery, suggesting potential for financial stability.
Support from Tata: When weighing options, investors may prefer a Tata-backed IPO over an unknown startup offering “10-minute grocery delivery.”
However, several critical factors will determine the IPO’s success:
Maintaining Competitive Edge: Can BigBasket uphold its advantages against rivals like Blinkit and Zepto, who are gaining market share with swift delivery services?
Preserving Customer Loyalty: Indian consumers are often attracted to discounts. If a competitor provides better deals or faster service, will customers switch their preferences?
Balancing Profitability and Growth: The challenge lies in scaling the business without incurring losses—achieving this balance will be crucial for ongoing success.