E-commerce player Infibeam files papers for INR450 crore IPO

Indian e-commerce player Infibeam Incorporation Ltd has filed draft red herring prospectus (DRHP) with the capital market regulator SEBI for its initial public offering (IPO). Infibeam – the first e-retailer to list its shares in India – plans to raise INR450 crore through the public issue.

Established in 2007 – the same year when Flipkart and Myntra started – Infibeam operates the infibeam.com website and BuildaBazaar marketplace for enterprise users. On the retail side, the e-retail business included more than 15 million SKUs of products across 40 product categories as of 31 March 2015. The company has more than 4,000 merchants on Infibeam.com and it claims to serve more than 7.2 million active users. Infibeam has also set up a joint venture with Sony, named Indent, which is focused on digital entertainment. Infibeam holds 74% stake in Indent which powers Jive pre-installed mobile application on Sony smartphones.

Issue structure

The issue will include sale of fresh shares but none of the existing investors plan to offer their shares in the public offer. Out of the total 4.25 crore shares, promoters and promoter group own 2.41 crore shares or 56.77% of the company’s equity share capital. The promoter group is led by Vishal Mehta who directly owns 14.09% shares while Infinium Motors Private Limited – a promoter group company – holds 12.46%. The number of shares will be disclosed later but the Ahmedabad-based company will raise shares worth INR450 crore.

Use of funds

Since there will be no offer for sale, entire proceeds of the issue will go to Infibeam. The company plans to use the funds for expanding business, setting up cloud data unit and new logistics centers. The biggest allocation of INR235.2 crore has been made for a new cloud data centre and purchase of property to house its registered and corporate offices. Nearly 37.5 crore will be invested in setting up 75 logistics centers while INR67 crore will be used to purchase software. Remaining amount will be used towards general corporate purposes.

Financial performance

Like most e-commerce players, Infibeam isn’t profitable yet. In line with the exploding e-commerce market in India, Infibeam has been able to register consistent top line growth. Its nine-month revenues of FY2014/15 have already surpassed the top line in last FY. While profitability is still far for the company, Infibeam appears to be getting a good grip on its costs as the latest data indicates. Infibeam’s net loss for the nine month period stood at INR9.6 crore compared with a loss of INR25.9 crore in FY 2013/14.

Infibeam’s consolidated financial performance (figures in INR crore)

 FY 2010/11FY 2011/12FY 2012/13FY 2013/14Nine months FY 2014/15
Total revenue 54.4129.2152.6209.0218.6
Total expenses 52.7140.0177.5235.9227.9
Profit/(loss) after tax(18.6)(10.8)(24.9)(25.9)(9.6)

Krishna Bagra

Coming from a family of investors and financial analysts, Krishna learnt wading through regulatory filings pretty early in her career. At IPO Central, Krishna plays twin roles of contributor and head of research desk. She can also be reached at +krishnabagra .

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