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Tata Group to buy 68 percent stake in BigBasket for INR 9500 crore

Tata Group to buy 68 percent stake in BigBasket for INR 9500 crore

Published on 18 February 2021 Views 224 Comments 0

Introduction: Best Tata Share to Buy

Tata Group has now joined hands with Big Basket. As per the reports, Tata Group has signed a deal with Big Basket shares and will buy a majority stake of 68% in BigBasket, an Online Grocery Brand. The deal value is expected to be ₹9,500 crore.

With this deal, the valuation of BigBasket is assumed to be ₹13,500 crore. Also, as per the news report, Tata Group is planning to bring the IPO of Big Basket by next year, 2022.

About BigBasket: Tata Bigbasket Share Price

  • Bengaluru based BigBasket, which was founded in 2011, provides online grocery delivery services. 

  • It is India’s largest online grocery company. Almost 1.5 year back, the company had set their foot in the Unicorn Club by crossing their market valuation of ₹1 billion)

  • As of FY20, BigBasket has a whopping  50% market share in online grocery delivery services in India.

  • BigBasket provides over 1000+ products and services over 26 cities.

 

Details of Tata-BigBasket Deal: Tata Big Basket News

  • The deal value is expected to be ~₹9,500 crore, thus valuing BigBasket around ₹13,500 crore

  • If the deal is confirmed and finalized, then it will be exit route for the existing key investors of BigBasket like Alibaba Group holding 29.1%, Abraaj Group with 16.3%, Ascent Capital with 8.6%, IFC (International Finance Corporation) having 4.1% and CDC Group with 3.4% stake. 

  • The top management of BigBasket will continue their service, including Co-Founder Hari Menon, even after the deal. Report says that he will remain in the management team for 3-4 years.

  • Further, this deal will take place in 2 rounds of capital infusion. Primarily, Tata Group will infuse capital worth $200-$250 million. 

  • Tata group is currently looking forward to getting the nod from Competition Commission of India (CCI) which is anticipated to be completed by this month.

Financials of BigBasket: Bigbasket Turnover 2020

  • BigBasket isfacing loss continuously from the last 2 years. In FY20, BigBasket has reported a consolidated net loss of ₹710 crore, which is 24.2% more than loss faced in FY19, amounting to ₹572 crore.

  • But, Revenue of the company has shown a 36% increase in FY20 of ₹3,818 crores.

  • Also, the Total expenses of the company have increased in FY20. Expenses in FY19 were ₹3376 crore, which went up by 36% to ₹4433 crore in FY20.

  • Its EBITDA increased by 5.42% in FY20 in comparison with FY19.

  • Book Networth has increased by 42.08% between FY19 and FY20.

Existing Shareholders of BigBasket: Tata Buys Big BasketBigBasket Existing Investors

 

Top Competitors of BigBasket: Top Acquires Big Basket

 

BigBasket CompetitorsImpact of the Deal: BigBasket Bought by Tata

  • This deal will prove to be of high importance to Tata Group because it will give boost to their entry into the Digital Retail Market

  • Also it will provide Tata Group to have access to the current gigantic user base of BigBasket, strong distribution network, access technology enlarging existing product portfolio.

  • Also, both the companies can cross-sell products on each other platforms.

  • Following this acquisition, Tata Group will also enter the online retail market space and will compete with existing market players such as Reliance Industries Limited, Amazon ,Walmart owned Flipkart and other small online players like Grofers, etc.

  • The Tata-BigBasket deal will give Tata Group their forthcoming “Super App” a nice kick off. Super App is expected to be launched in 2021. The specifics of Super App were provided by the Tata Sons Chairman N Chandrasekaran in an investor meeting last year. With their app, Tata Group plans to provide all kinds of products and services like fashion, lifestyle, grocery, electronics, etc. under one single app.

  • Currently, Tata group has presence in retail segments following app/stores:  

    • Tata CLiQ: for Fashion & Electronic Products 

    • Croma: Consumer Electronics and Durable  

    • StarQuick: Online Grocery Store.

Growth in Retail Sector in India: Big Basket Acquisition by Tata

Deals in Retail Space or Digital Retail Market space in India will always be considered a hot topic in India Market due to present size and the visible growth opportunity in coming years. The e-grocery market is expected to grow at 57% CAGR from $1.9 billion in 2019 to $18 billion in 2024, as per report of BigBasket & RedSeer.

Stock Price Movement of Tata Consumer Products and Trent: Tata BigBasket Deal Latest News

Price Chart of Tata Consumer Products

Price chart - TCPL

Price Chart of Trent

 

Price chart - Trent

 

Herewith, this deal may have a great impact on 2 stocks of Tata Group i.e., Tata Consumers and Trent.

In the last 2 days, both the stocks have also witnessed jumps in their prices. Trent has gone up by almost 12% from ₹686.8 to 768.85. Also, Tata Consumer Products has also reported growth of 4% from ₹607.5 to ₹632.15. It will be great to see how long this rally will go with the following news.

The two mentioned stocks should be kept in radar, but investors should also do the due diligence and detailed research before investing. Do not directly invest on the basis of news, rumors or tips. Happy Investing!

Get more useful articles on various stocks with appropriate stock ratings only on Invest Yadnya.Check out more stock articles, for a thorough Invest Yadnya review.

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