App sale

BigBasket’s valuation could hit $4-5 billion as sales surge

Bengaluru: Even as Tata Digital seeks additional cash from holding company Tata Sons to fuel its ambitious growth plans, one of its biggest assets, grocer BigBasket has seen its valuation jump following a sale of secondary shares to $2.7 billion (earlier this year). Brand Capital – the strategic investment arm of The Times Group, which also publishes this newspaper, has sold part of its stake in the company to Tata Digital, people briefed on the matter said.

Existing investors – Tata Digital and others – internally value the company at $4 billion to $5 billion based on its gross sales and projected annual growth in coming years, the people said, adding that the growth plans had been discussed at the recent BigBasket board meeting. in February .

“We are thrilled to be able to support BigBasket’s incredible growth since its inception. BigBasket serves millions of Indians daily and has played a vital role in the mission during the pandemic shutdowns, in particular. We will continue to be their trusted partner as they grow and reach new heights within the Tata Group,” said Sam Subramaniam, CEO of Brand Capital, referring to the recent secondary sale of shares.

BigBasket co-founder and CEO Hari Menon declined to comment while an email sent to a Tata Digital spokesperson elicited no response.

“Given the strong growth forecast for BigBasket, its valuation is well above the recent secondary stock sale. The company has forecast at least 40% annual growth in gross sales over the next two years,” said a person knowledgeable about it.

In May last year, Tata Digital acquired a majority stake in the Bengaluru-based online grocery company for a valuation of around $1.8 billion. Soon after, he funneled around $200 million into the business, valuing it at $2 billion, ET reported on May 28 last year.

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The big jump in BigBasket’s valuation comes at a time when its parent company, Tata Digital, has been in preliminary talks with high-profile global investors to raise new capital for its e-commerce business.

ET reported on March 9 that global investors have yet to commit new capital to Tata Digital and are awaiting the launch of the high-profile super app Tata Neu. This is unlikely to happen in March, the sources added.

For its part, BigBasket would close the current fiscal year with gross sales of $1.3 billion. In the previous financial year, it became the second e-commerce vertical player to register actual gross sales of $1 billion (Rs 7,800 crore).

Sources familiar with BigBasket’s current plans said its rapid entry into trading with BB Now should also further bolster gross sales. The pandemic helped BigBasket win new consumers faster while existing users bought more.

“Quick trade or 15-30 minute delivery space is competitive, but BigBasket would have the advantage of the existing warehouse network and it is expanding its dark store network,” said one of the people mentioned above. above. BB Now has already launched in parts of Bengaluru and is gradually being made available to a wider range of PINs.

“We’ve gone far in three to four hour deliveries, in fact in most cases it’s two to three hours. Now it’s (hourly delivery) what we’re going to do next,” said said Menon, “This time it’s very clear: thanks to our experience, the focus is on setting up dark stores, reconciling the customer’s inventory and warehouse and ensuring that the cold chain works better and faster and that fresh produce can be delivered easily,” Menon had told ET in July last year.

Meanwhile, ET also flagged the critical role BigBasket plays for Tata Digital where it will power a unified supply chain for all brands on Tata Neu. Menon also told ET in November that the company is working to integrate all of its grocery offerings into its main BigBasket app, which is internally referred to as the “BB Super App.” It also included integrating its subscription-based essentials delivery service, BB Daily, onto the main app, he said at the time.

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