Grofers is on track to rack up $60-$70 million in new funding, sources told ET, as the online grocer registers a major demand surge with more Indians shopping online for essentials amid a continued nationwide lockdown to stem the spread of the Covid-19 virus outbreak.
Separately, it is projecting Ebdita-level profitability in May. Ebidta refers to a company’s earnings before interest, depreciation, tax and amortisation, and is a widely used measure of profitability.
Existing investors SoftBank Vision Fund, and others including Apoletto Asia, Sequoia Capital and Tiger Global are expected to back the online grocery retailer. The discussions are, however, not yet final, the sources said.
Despite a rapid growth in business, the capital raising will be at a valuation of around $650 million, not much changed from when it raised money previously, the sources said.
The funding comes at a time when the company’s sales and margins have doubled, compared to the same period last year. It, however, wants to increase cash reserves, said a source familiar with the development.
Grofers expects to clock more than $700 million in annualised gross merchandise value or GMV, for this year, as per estimates drawn on the basis of current uptick, or what is known as a company’s annual run rate, people familiar with the matter said. The company has been able to bring on board 250,000 new customers in April, with the number set to increase to 350,000 in May, said a person in the know.
“The company is in talks with external investors as well, which is when the valuation may see a jump, but that may take longer… for now, their existing shareholders are ready to plough additional funds,” a person privy to the deal details said.
As part of the new financing, Grofers is enhancing its employee stock ownership plan (Esop) pool by pumping in another $25 million to attract and retain talent, according to people briefed on the matter. Responding to ET’s detailed questionnaire, a Grofers spokesperson said, “We don’t comment on speculation.”
Grofers said its business operations were back to normal in all cities except Mumbai and Pune, and that it was scaling up to serve even more households in May.
“We achieved operational profitability in January this year and expect to be Ebitda-profitable for the month of May,” the spokesperson added, without disclosing specifics.
Grofers and Alibaba-backed rival BigBasket have nearly doubled the number of daily deliveries compared to a month ago, ET reported in its April 22 edition.
The unprecedented spike has come despite shuttered warehouses in the early days of the lockdown and labour shortage, which these companies have grappled with since the time the stay-at-home guidelines kicked in. The CEO of Grofers, Albinder Dhindsa, had earlier told ET in an interview that the online retailer was projecting daily orders to increase by 50% in the coming months.