Apna Mart, the franchise-led grocery chain targeting India’s tier 2 cities, has seen a remarkable 86% jump in its revenue for FY24, following an equally impressive performance the year prior. However, despite the revenue boost, the company’s losses have also grown, raising questions about its long-term sustainability.
Strong Growth Despite Rising Losses
The three-year-old brand, co-founded by Chetan Garg and Abhishek Singh, achieved a revenue of Rs 59.4 crore in FY24, up from Rs 32 crore in FY23, according to its annual financial statements from the Registrar of Companies (RoC). This marks an impressive 85.6% year-on-year spike in the company’s operating scale, which follows an eight-fold revenue increase in FY23. However, the increase in revenue hasn’t come without a cost. Apna Mart’s losses for the fiscal year ballooned by 50%, amounting to Rs 33 crore, up from Rs 22 crore in FY23. While the increase in revenue indicates strong growth, the rising losses highlight ongoing financial challenges.
Founded as a franchise-driven, omnichannel grocery and FMCG chain, Apna Mart operates in 14 cities, including Ranchi, Hazaribagh, and Bilaspur, offering delivery within 15 minutes. The company has built its business around FMCG sales, with this category accounting for the majority of its revenue in FY24.
Rising Costs and Impact on Profitability
Despite strong revenue growth, Apna Mart’s expenses have also surged. Procurement costs for products, the biggest expense for the company, grew by 85% to Rs 58.4 crore, accounting for 61% of total expenditure in FY24. As the company expands, this increase in procurement costs is expected to continue as it scales.
In addition, employee benefits—another major cost—rose by 82.4% to Rs 16.6 crore in FY24. This increase includes a Rs 2 crore non-cash ESOP (Employee Stock Ownership Plan) cost. Apna Mart’s overall expenses for the year rose by 77.8% to Rs 96 crore, up from Rs 54 crore in FY23, with other significant expenses arising from advertising, legal, and manpower charges.
With its expenditures growing at a faster rate than its revenue, Apna Mart’s losses also grew. The company’s Return on Capital Employed (ROCE) and EBITDA margin stood at -57.7% and -49.76%, respectively. Despite these losses, the company’s expense-to-earnings ratio, which measures the balance between costs and earnings, stood at Rs 1.62 in FY24.
Backed by Major Investors and a Challenging Market
Apna Mart’s success in scaling up has attracted significant investor attention. The company has raised over $14 million in funding to date, backed by prominent investors such as Accel Partners, Peak XV Partners, Titan Capital, Disruptors Capital, and Sparrow Capital. The company’s valuation currently stands at approximately Rs 397 crore (around $48 million), with an enterprise value-to-revenue multiple of 6.68X for the fiscal year.
Despite the strong backing, Apna Mart faces challenges in the competitive and fast-evolving quick commerce sector, particularly in tier 2 cities. While the franchise-based model has helped control some costs and mitigate losses, Apna Mart’s scale still doesn’t offer significant procurement advantages. As a result, the company may face hurdles in maintaining its growth trajectory and eventually turning profitable in these markets.
Looking Ahead
Apna Mart’s continued expansion into smaller cities is ambitious, given the challenges of achieving profitability in such markets. The company has yet to demonstrate how it will overcome its rising costs and move toward profitability, particularly as competition in the quick commerce space intensifies.
While the growth in revenue is certainly encouraging, it remains to be seen whether the company can scale effectively while managing its costs and minimizing losses. As it stands, Apna Mart’s future hinges on its ability to overcome these challenges in an increasingly competitive sector.
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