Snapdeal Limited Company Business Profile
Founded in 2007, Snapdeal Limited is one the leading Ecommerce Companies providing an online platform to shop for products from a wide range of categories with a focus on lifestyle home furnishing, beauty, personal care and general merchandise.
Operating with multiple vendors, Snapdeal sells wide-ranging products from different categories including appliances and electronics. The company is targeting mainly the demand arising from the Tier 2 cities of India that helps it to penetrate new markets.
There was a time, in 2010, when Snapdeal was one the unicorns in India, and known as the second largest e-commerce company. But since 2017, the downturn started for this company due to being cash-starved and facing stiff competition from the top two leading eCommerce giants Flipkart and Amazon which almost captured the market share.
As on 31 August 2021, Snapdeal attends 40.15 million monthly active users with 50.37 million customers who shopped her since 2019. Snapdeal mostly has 77% repetitive customers, and at the same time looking to grab more new customers.
The major source of income of Snapdeal is from marketing fees and freight and collection fees that it accumulates from its sellers. In 2021, Snapdeal introduced the cash-on-delivery feature and recently introduced, an initiative known as “Power Brands” that helps to create a network of suppliers who are offering good quality products at affordable prices. And since its launch, it has created 13 “Power Brands” and added more to the list.
Operating with around 650 employees, Snapdeal also has a subsidiary company in the name of Unicommerce eSolutions Pvt Ltd that offers Software as Service solutions helping the operation of e-commerce business for traditional brands, D2C brands and retailers etc.
Snapdeal Limited IPO Details:
|IPO Open Date||Not Disclosed|
|IPO Close Date||Not Disclosed|
|Listing Date||Not Disclosed|
|Face Value||₹1 per share|
|Lot Size||Not Disclosed|
|Issue Size||Not Disclosed|
|Fresh Issue||Equity shares aggregating up to ₹ 1,250 crores|
|Offer for Sale||30,769,600 equity shares|
|Issue Type||Book Built Issue IPO|
|Listing At||BSE, NSE|
|QIB Shares Offered||Not more than 75% of the Offer|
|NII (HNI) Shares Offered||Not less than 15% of the Offer|
|Retail Shares Offered||Not less than 10% of the Offer|
Snapdeal Limited IPO Share Price
The share price of the Snapdeal IPO is in the range of Rs XXXXX. This price range is a lower and higher band in which investors can bid while applying for the IPO. Retail investors should bid at the cutoff price to maximize their chances of getting the allotments.
Snapdeal IPO Size & Launch Date
As per the reports, the size of Snapdeal IPO would be around Rs 1250 crore and the exact amount will be known when the IPO will be launched. And officially the launch date of the Snapdeal IPO is not declared. But once the launch date will be declared the IPO will be open within that date and investors can bid for the applying Snapdeal IPO within that date.
Snapdeal Limited IPO Objective
The Snapdeal IPO comprises fresh issues and an offer for sale, in which the fresh issue will be around Rs 1250 crore. Out of this fresh issue, Rs 900 crore will be utilized to fund the organic growth of the company and general corporate purposes.
A portion of the amount of the IPO will be deployed to attract new customers and retain the existing ones. And few parts of the IPO will be also utilized for upgrading the technology, resource sand other infrastructure of the company.
Snapdeal Limited Financial Statement:
|Particulars (In Rs Crore)||FY22 (6M)||FY21||FY20||FY19||CAGR|
|Revenue from operations||238.59||471.75||846.4||839.42||-17.50%|
|Loss Before Tax (LBT)||-176.24||-126.08||-294.35||-188.46||-12.50%|
|Loss After Tax (LAT)||-177.42||-126.98||-294.35||-189.92||-12.60%|
The financial performance of Snapdeal is not that impressive, as the company has shown negative CAGR growth in the last three years. And during the same period, the company has incurred a loss that is making it difficult to generate the cash flow.
In FY19, the company earned a revenue of Rs 839.42 crore which declined to Rs 471.75 crore in FY21. However, in the first half of FY22, the company generated a revenue of Rs 238.59 crore with a negative EBITDA of Rs 165.28 crore.
In FY19 Company suffered a loss of Rs 189.92 crore rose in FY20 and reached Rs 177.42 crore in the first half of FY22. Intense competition and high marketing and promotional expenses making difficult for Snapdeal to become profitable.
Snapdeal Limited Promoters & Shareholders:
Starfish I Pte. Ltd. is the promoter and Wonderful StarsPte. Ltd, Sequoia Capital India III Ltd. Kenneth Stuart Glass, Ontario Teacher's Pension Plan Board, Myriad Opportunities Master Fund Limited and Milestone Trusteeship Services Private Limited are the leading shareholders of Snapdeal. All these shareholders will offload part of their shareholdings.
Pre-offer Shareholding Patterns of the Shareholders:
|S. No.||Name of the Selling Shareholders||No. of Equity Shares Held||Percentage of the pre-Offer paid up equity share capital|
|1||Starfish I Pte. Ltd.||14,06,80,480||35.41%|
|2||Wonderful StarsPte. Ltd.||1,74,05,280||4.38%|
|3||Sequoia Capital India III Ltd.||22,17,600||0.56%|
|4||Kenneth Stuart Glass||43,90,400||1.11%|
|5||Myriad Opportunities Master Fund Limited||38,11,520||0.96%|
|6||Ontario Teacher’s Pension Plan Board||79,79,520||2.01%|
|8||Milestone Trusteeship Services Private Limited||29,60,000||0.75%|
Offer for Sale of Equity Shares by the Existing Shareholders:
|S. No.||Name of the Selling Shareholder||Number of Equity Shares being offered in the Offer for Sale (Up to)|
|1||Starfish I Pte. Ltd.||24,000,000 Equity Shares|
|2||Wonderful StarsPte. Ltd.||2,968,000 Equity Shares|
|3||Sequoia Capital India III Ltd.||412,000 Equity Shares|
|4||Kenneth Stuart Glass||748,000 Equity Shares|
|5||Myriad Opportunities Master Fund Limited||649,600 Equity Shares|
|6||Ontario Teacher’s Pension Plan Board||1,360,000 Equity Shares|
|7||Laurent Amouyal||128,000 Equity Shares|
|8||Milestone Trusteeship Services Private Limited||504,000 Equity Shares|
Why Invest in Snapdeal Limited IPO or Not?
First of all, Investing in any loss-making company is not a wise decision, and Snapdeal is running through this phase. Investing in Snapdeal at this stage would be not recommended, as the company is not generating profit, hence the earning per share is also negative.
However, there are various other factors, you can consider while investing in this e-commerce company. Yes, the e-commerce sector in India is at a fast-growing stage and there is too much scope and opportunities for the companies providing e-commerce services.
If the Snapdeal IPO price is undervalued or offered at a huge discount, it can be considered for long-term investment. With the innovative marketing strategy and increase in the market share with the more penetration of new customers, in the future Snapdeal can also become a profitable e-commerce company in India with significant market share.
Apart from opportunities and strengths, various risks and threats in the industry can affect the revenue and profit of the company. Let's discuss the strengths and weaknesses of the company, based on that you can make your decision to invest in the Snapdeal IPO.
- Being a unicorn e-commerce company in India, Snapdeal has created a brand image all over the country. And in Tier 2 Cities Company is scaling up with the capital that will be raised through this IPO for the organic growth of the company. Tier 2+ cities contributed more than 72% of total revenue as of September 30, 2021.
- With new and more innovative technologies like AI, the company is revamping its technological capabilities making the company more efficient and productive. AI and machine learning-based product searching and recommendations help to grab more customers and monetize them to generate more revenue.
- Snapdeal offers a wide range of products at very reasonable prices which is a competitive advantage for the company to keep the customers intact and shop again who are looking to buy products at reasonable prices.
- Snapdeal currently retails more than 95% of listed items on its platform with a wide selection of value merchandise at affordable prices making it easier for the customer to find the best products looking under this price range.
- Snapdeal is backed by well-known investors with strong capital sponsorship and time-to-time strategic business advice from its esteemed shareholders making the company financially established.
- The first and far most important risk factor for Snapdeal is intense competition from the leading two e-commerce giants Amazon and Walmart-backed Flipkart, both have captured the major market share of the e-commerce industry in India.
- Owing to this stiff competition, retaining existing customers and acquiring new customers is another challenge that can indirectly affect the revenue growth of the company.
- In online sales and retailing, there is a huge risk of infringing products sold, illegal, unauthorized or counterfeit and misleading information about the products and company can damage reputation.
- Unfavourable economic conditions, changes in consumer behaviour in shopping and low growth of people's income can affect the customer's spending and will also affect the company's growth.
- Company business largely depends on the growth of the e-commerce industry and the inability to respond or change itself as per the new trends, consumers changing behaviour and barrier to technological developments can also affect the growth and development of the company.
- At the financial end -Snapdeal is facing another challenge due to continuing losses for the last three years making it difficult for the company to generate the cash flow for the operating expenses.
- And significant marketing and promotional expenses that account major portion of the expenses may cost the company to continue to suffer losses in the future too.
Snapdeal IPO Grey Market Premium (GMP)
The Snapdeal IPO GMP is not yet known as the IPO price is not disclosed. Once the IPO is open, the price will be disclosed and as per the demand and supply of the share price in the open market, the Snapdeal IPO GMP will be known. If the IPO price is undervalued, less GMP and as per the valuation of the stock overvalued there is less chance for higher GMP.
Snapdeal Limited IPO Valuation
The valuation of Snapdeal share price is also not possible due to the lack of the actual price of the IPO that has not been yet disclosed. And if you want to calculate and compare the valuation taking into account the price of the share with the EPS of the company, then also it would be not possible as the company is running into a loss and EPS is already negative.
Snapdeal IPO Review& Analysis
Snapdeal is one of the well-known e-commerce brands in India and is a part of one of India's fastest-growing sectors. And in India, there is too much scope and opportunities for online shopping retailers to penetrate new markets and grab more customers.
And in Tier 2 & Tier 3 cities, there is too much scope to expand the business and provide the online shopping experience to customers looking to shop the online products. And Snapdeal has a strong customer base with great scope to expand its operations.
Despite all these positive dynamics, the most concerning factor is the company is running into a loss for many years and the financial condition of the company is not good. Hence, it is very difficult as well as very challenging to become a profitable entity, especially in a such highly competitive environment, where only two leading players are dominating the entire e-commerce industry.
However, with more effective marketing strategy and acquiring a new customer base, can help the company to minimize its loss and for the time being, it can also become a profitable company in future. And investing in an e-commerce company would be not a wrong decision if the share price of such companies is available at a deep discount.
Analyzing the stock price of the company is not possible as the Snapdeal IPO price is not yet declared. Once the price will be known it would be easier to compare with peer group companies and analyse whether it is worth investing in Snapdeal IPO or not.
How to Apply for Snapdeal Limited IPO?
If you have a share trading and demat account at Moneysukh, you can easily apply for the Snapdeal Limited IPO. Just follow the steps given below.
Step 1:Once Snapdeal Limited IPO opens you can apply online.
Step 2:Browse at trade.moneysukh.com and log in with your Moneysukh User ID & password.
Step 3:Now you have to visit the IPO section and select Snapdeal Limited IPO.
Step 4:Here just fill in the required such as bidding price, quantity or lot and so on.
Step 5:Now you have to make the payment and your IPO application is successful.
How to Check Snapdeal Limited IPO Allotment Status?
Just like applying, checking the Snapdeal Limited IPO Allotment Status is also very easy and hassle-free through Moneysukh online platform. You have to just wait till the IPO is closed and the allotment is finalized. If you have been allotted any share it will be transferred into your demat account that you can sell after listing of the shares on the NSE or BSE stock exchanges.
Also Read: How to Increase the Chances of IPO Allotment
However, if IPO is oversubscribed and unfortunately if you have not been allotted any share, your IPO application money will be returned to your bank account or linked account where you have allocated the fund while applying for the Snapdeal IPO.