SUMMARY
The IPO will entirely comprise a fresh issue of shares and will not have any offer for sale (OFS) component
Currently, founders Nikhil Kumar and Lovepreet Mann together hold 50.64% stake in the startup
Infurnia will use the IPO proceeds to expand the business of its wholly owned subsidiary company and for general corporate purposes
Cloud-based architectural design software startup Infurnia Holdings has filed its draft red herring prospectus (DRHP) with the Securities and Exchanges Board of India (SEBI) for raising INR 38.2 Cr via its initial public offering (IPO).
The IPO will entirely comprise a fresh issue of shares and will not have any offer for sale (OFS) component. The startup’s shares will be listed on the BSE Startups platform.
Infurnia’s founders – Nikhil Kumar and Lovepreet Mann – hold the largest share in the startup. While Kumar holds 30.63% stake in Infurnia, Mann has 20% stake. Together, the promoter shareholding in the startup stands at 50.64%.
In January this year, Infurnia had said that it was planning for an IPO to list on the BSE Startups platform.
The startup will use the funds raised through the IPO to expand the business of its wholly owned subsidiary company; towards the development, upgradation and maintenance of its cloud-based software; and for other general corporate purposes.
Infurnia would invest INR 29.02 Cr in its wholly owned subsidiary, while INR 8.68 Cr would be used for general corporate purposes.
“Our company believes that listing will give more visibility and enhance our company’s corporate image, brand name and create a public market for its equity shares in India. It will also make future financing easier and affordable in case of expansion or diversification of the business,” Infurnia said in its DRHP.
Set up in 2014 by Kumar and Mann, Infurnia owns, develops and operates a cloud-based platform that allows professionals to design buildings, interiors, and modular kitchens. The startup has so far raised over INR 10 Cr in multiple equity funding rounds from various investors and corporate bodies.
After the onset of Covid-19 pandemic in 2020, Infurnia decided to rearchitect its entire software in order to shift from web-only to a web-first approach and become natively available across desktops, tablets, virtual reality, and servers.
The startup stated that it took longer than a year to come out with its revamped software and another two quarters to make it usable. This is perhaps visible in Infurnia’s financial results as well.
Infurnia’s consolidated net loss widened to INR 2.77 Cr in the year ending March 31, 2022 from INR 2.65 Cr in the previous financial year. Revenue from operations also declined to INR 13.6 Lakh in FY22 from INR 26.33 Lakh reported in FY21.
The decline in revenue hit the bottom line despite Infurnia’s measures to cut expenses. Its total expenses fell 1.5% to INR 2.58 Cr in FY22 from INR 2.62 Cr in the prior fiscal year.
The startup cut its employee benefit expenses in FY22 to INR 1.68 Cr from INR 2.24 Cr in FY21, largely helped by a reduction in its ESOP expenses.
While the startup expects its operating expenses to increase in the future as it expands its operations, the DRHP noted that if the revenue does not grow at a higher rate than the expenses, achieving and maintaining profitability might be difficult. Talking about the risk factors, Infurnia also said that it might incur considerable losses in the future for various reasons.
The startup operates in a highly-competitive market, and competes with the likes of HomeLane, Autodesk, RoomSketcher, SketchUp, and Bonito, among others.
According to the National Association of Software and Service Companies (Nasscom), the Indian software product industry is expected to reach a size of $100 Bn by 2025.
