Tata Group is actively making every possible move to strengthen its presence in India’s retail market, and the acquisition of BigBasket was a part of the big game plan. To solidify their grip on BigBasket, TATA Digital has reportedly bought the part stake from Brand Capital – the investment arm of Tims Group – valuing the e-grocer $2.7 billion. It’s important to note that barely a year ago TATA Digital acquired a majority stake in BigBasket at a valuation of $1.8 billion.
But, it appears that TATA Digital, along with other investors, are not satisfied with the soaring valuation of BigBasket, and believe that the company could be worth anything between $4 billion to $5 billion.
To fuel its ambitious growth strategies Tata Digital now seeks additional cash from its holding company Tata Sons.
Tata Digital and other existing investors are internally valuing the company between $4 billion and $5 billion based on its gross sales and its projected growth for the upcoming years, according to sources of ET. During the recent BigBasket’s board of directors meeting, which was held in February, the plans for growth were discussed.
“We are delighted to be able to support BigBasket’s amazing growth since their early days. BigBasket serves millions of Indians daily and played a mission critical role during the pandemic lockdowns, in particular. We will continue to be their trusted partner as they grow and scale new heights within the Tata Group” said Sam Subramaniam, CEO, Brand Capital, referring to the recent secondary share sale.
The company is eyeing at least 40% growth in gross sales in the next few years. The board believes that given the significant growth that BigBasket is projected to achieve the valuation of egrocer is higher than $2.7 billion that is estimated during the purchase of stake from Brand Capital.
The dramatic increase in BigBasket’s valuation occurs at a moment when its parent company Tata Digital has held early-stage discussions with a few renowned investment firms from around the world to raise more capital for its ecommerce venture.
Global investors, however, are reportedly yet to make any new commitment for fresh capital for Tata Digital as they wait for the launch of the much-hyped Tata Neu superapp.
Despite missing several deadlines in past, the launch of TATA superapp is unlikely to take place in March.
BigBasket is expected to report the revenue to the tune of $1.3 billion (Rs, 10,000 crore) in the current fiscal year. In FY 2020-21, the company’s actual gross sales touched $1 billion for the very first time.
At the time when most of the delivery players are jumping into the quick-commerce, which promises grocery delivery within 15-20 minutes, Bigbasket has also joined the race with “BB Now” in a bid to boost gross sales. The pandemic was able to help BigBasket increase its reach to new customers faster while the average order size of existing customers went up too.
Despite being a highly competitive space, the quick commerce is attracting the eyeballs of entrepreneurs. Almost every delivery startup, including Zomato to Swiggy, is trying to emerge as the segment leader. BigBasket is no exception. In fact, BigBasket has the advantage of its existing network of warehouse and dark stores which give it an edge over its competitors.
Currently, BB Now has been launched in selected areas of Bengaluru, and is slowly but steadily adding more deliverable pin codes.
“We have gone deep into three-four hour deliveries, in fact in most cases it’s two-three hours. Now, it’s (hourly delivery) is what we are going to do next,” says Hari Menon, CEO & Co-founder of BigBasket.
BigBasket is reportedly working to bring all sorts of offerings through one app, internally called BB Super App. It is also helping Tata Digital to have a unified supply chain for all brands on TATA Neu. Besides, the daily essentials delivery service BB Daily will also be part of the superapp.