Ecom Express Files Draft Papers For INR 2,600 Cr IPO

Just two days after receiving board’s nod for floating its initial public offering (IPO), logistics startup Ecom Express today (August 16) filed its draft red herring prospectus (DRHP) with the markets regulator Securities and Exchange Board of India (SEBI).

The company is aiming to raise INR 2,600 Cr from the public issue, which will comprise a fresh issue of INR 1,284.5 Cr and an offer for sale component of INR 1,315.5 Cr. 

The startup also intends to raise INR 256.9 Cr through a pre-IPO placement prior to filing its Red Herring Prospectus (RHP). 

The company will be using the funds netted from the IPO to set up new processing centres with automation and new fulfilment machineries (estimated investment of INR 387.44 Cr), invest in IT equipment (INR 73.71 Cr) and strengthen its cloud infrastructure (INR 239.23 Cr).

Besides, the fresh proceeds will also be deployed to repay INR 87.19 Cr worth loans availed by the company earlier and for general corporate purposes. 

The OFS component sees promoters Kotla Satyanarayana (cofounder and director), Manju Dhawan (cofounder), Kotla Sridevi, and Kotla Rathnanjali selling shares worth INR 33.8 Lakh, INR 8.98 Cr, INR 7.62 Cr and INR 1.02 Cr, respectively. 

Meanwhile, Warburg Pincus investments’ Eaglebay Investment and PG Esmeralda, who are also Ecom Express’ promoters, will be selling shares worth INR 211.48 Cr and INR 931.39 Cr. 

Besides investor British International Investment (BII) will also be selling shares worth INR 136.97 Cr. Other investors to be selling shares in the IPO include Jayanti Krishnan, Rabeya Saxena and Saheba Saxena. 

Upon receiving the market regulators’ approval, the startup will list its shares on the NSE and the BSE. 

In its DRHP, the startup also revealed its financial numbers for the financial year 2023-24 (FY24). In the fiscal year, the startup managed to trim down its losses to INR 255.87 Cr, down 67% from the INR 428.13 Cr loss it incurred a fiscal prior. 

Meanwhile, its revenue from operations stood at INR 2,609.16 Cr, a 2% increase from the INR 2,553.93 Cr it made in the fiscal prior. Its expenses also rose marginally in the fiscal, growing 0.6% year on year INR 2,921.55 Cr from the INR 2,902.83 Cr it spent in FY23.

“Our losses and negative cash flows may continue in future periods, given the investments expected to be made to grow our business and logistics infrastructure, enhance our supply chain capabilities, develop and launch new solutions and service offerings, expand our customer base in existing markets, penetrate new markets and continue to innovate on our technological platform,” Ecomm Express’ DRHP read.

Observing that the company’s business primarily revolves around providing logistics offerings to ecommerce players, the startup observed the following to be some of the key risks involved in investing in the IPO: 

– Changing macroeconomic conditions on ecommerce industry

– Mobile internet penetration and usage in India

– Availability, reliability and security of e-commerce, omni-channel retail platforms

– Emergence of alternative business models that better suit customers’ needs

This marks the logistics startup’s second attempt at listing. In February 2022, the logistics startup finalised on an INR 4,860 Cr IPO. However, it shelved those plans later that year on account of bearish market sentiments. 

It is pertinent to note that the startup’s second attempt at listing comes at a time when homegrown businesses are making a beeline towards the bourses. Earlier today, coworking startup Smartworks and construction material procurement platform ArisInfra Solutions also filed their IPO papers with the SEBI. Besides, other startups like BlackBuck and Avanse Financial Services are also in queue to get their IPO plans approved by the market regulator. 

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