IPO Dates
Important dates with respect to IPO allotment and listing
IPO Open Date
To be announced
About Company
Snapdeal has filed for an upcoming IPO worth ₹1,250 crore. It consists of fresh issue worth ₹1250 cr and an Offer for Sale of 30,769,600 equity shares (by SoftBank). It is an online e-commerce platform that plans to invest ₹900 cr in organic growth initiatives. It is also considering a pre-IPO placement worth ₹250 cr that will be subtracted from the fresh issue.
The lead managers of the book running are Axis Capital Ltd, CLSA India Pvt Ltd, JM Financial Ltd and BofA Securities India Ltd.
The company was founded in 2007 as Jasper Infotech and came to be called “Snapdeal Private Limited” in 2019. Kunal Bahl and Rohit Kumar Bansal are its whole-time directors. In addition, it has six other directors.
Snapdeal declared (in their DRHP) that it is one of the top four online lifestyle shopping destinations in India as of 31st August, 2021. The goods sold on the platform include fashion, books, electronics, beauty and personal care, sports and outdoor equipment etc with mobile phones and accessories being the highest sold items on snapdeal.
Furthermore, its subsidiary Unicommerce provides SaaS instruments in processing and intelligence services and is one of the largest in terms of revenue in that particular field for retail clients.
Snapdeal IPO
The funds raised from the IPO are expected to be used in -
- Organic growth initiatives
- General corporate expenses
In addition, the company expects to benefit from the general improvement in brand image from going public.
Why should you invest in Snapdeal IPO?
- The Indian e-commerce business is expanding, especially in Tier 2 cities where Snapdeal has a strong customer base
- It has a strong focus on investing in technologies that can help it overcome competition from big players.
- It is backed by big names such as Alibaba and Foxconn.
Competitive Analysis
Snapdeal faces stiff competition from major players with strong finances such as Amazon and Flipkart (the latter is seeking a market valuation of $50 billion, several times more than Snapdeal).
IPO Financials
| For the period ended March 31st, 2019 | For the period ended Sept 30th, 2021 | For the period ended March 31st, 2021 | For the period ended March 31st, 2020 | |
|---|---|---|---|---|
| Total Income (in ₹ cr.) | 925.32 | 252.84 | 510.27 | 916.66 |
| Profit After Tax (in ₹ cr.) | -187 | -177 | -125.44 | -273.54 |
| EPS (in ₹) | -7.23 | -4.49 | -3.18 | -6.94 |
| Net Merchandise Value (in ₹ cr.) | 2127.44 | 668.12 | 912.36 | 1760.99 |
| Net cash flow from operating activities (in ₹ cr.) | -31.75 | -110.14 | -91.5 | -371.84 |
| Net cash flow from/ used in investing activities (in ₹ cr.) | -0.12 | 159 | 140.75 | 362.9 |
| Net cash used in financing activities (in ₹ cr.) | -33 | -1.98 | -4.12 | -2.92 |
| To Be Announced | On March 31st, 2020 On March 31st, 2019 | On Sept 30th, 2021 | On March 31st, 2021 | On March 31st, 2020 |
| Total Assets (in ₹ cr.) | 1359.7 | 683.63 | 795.35 | 925.30 |
| Total Current Assets (in ₹ cr.) | 1119.24 | 528.27 | 650.49 | 690.44 |
| Total Liabilities (in ₹ cr.) | 714.71 | 370.65 | 276.29 | 271.97 |
| Total Current Liabilities (in ₹ cr.) | 695.04 | 357.47 | 261.88 | 254.92 |
Know before investing
Strengths
3
Snapdeal has already created a brand image as a value-for-money platform in Tier 2 cities in India which they can scale up with the capital they raise via the organic growth that they claim to be raising the money for.
Snapdeal enjoys certain favourable market trends. The DRHP mentions that the value lifestyle retail market in India is set to grow at 15% between 2021-26 - from $88 billion to $175 billion. The shopper base is set to rise from 140-160 million to upto 350 million in the same period. It is an enormous opportunity for an e-commerce platform following an omni-channel model that has such a strong presence among middle income mobile phone owners.
It has a strong focus on technology including AI - having the right human and technological capability can help them overcome the current inefficiencies over time. Therefore the product itself is good - has fine UX and also multilingual user support.
Risks
3
Their sales, revenues, profits have not shown sustained positive growth - they need to stop being a loss-making, inefficient firm in order to instil confidence in potential investors and gain positive share price movements.
Their incapability to sustain their presence in Tier 1 cities means that they will not be entering a foreign high-value market any time soon. Therefore they are completely dependent on the Tier 2 cities market in India. Moreover, over time as the customers in these cities grow richer due to India’s economic growth they might switch to other brands which they may consider to be more “high-value”. At the same time, minor dips in the economy can have a far-reaching impact on its customer base - it is sort of stuck in a catch 22 situation.
It is dependent on Google Play store and Apple store for both promotion and existence of its app.
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In the last three years, Snapdeal has recorded only losses.
The IPO might value Snapdeal at around $1.5 billion. However, this value is flexible.
The Snapdeal IPO consists of fresh issue worth ₹1250 cr and an Offer for Sale of 30,769,600 equity shares.
Snapdeal has a strong presence in Tier 2 cities and its app is rated well. However, it will take time to recover its profits. Therefore there is indeed potential for growth.
It has converted into a public company and its shares will soon be traded publicly once the IPO is launched.
Snapdeal had a current ratio of 1.47 which is fairly good. It is using a fairly high amount of money in investing activities which shows it is looking for growth avenues. Whether it is able to start making profits is yet to be seen – however it is backed by many major investors which is a good sign.
The allotment dates are yet to be announced.
The lot size is yet to be announced.
