Pepperfry to file draft IPO papers next quarter, FY22 revenue crosses pre-Covid levels

“They are looking to file the draft red herring prospectus (DRHP) in the subsequent quarter,” the source said, adding that the company would take a final call by November.

The Goldman Sachs-backed startup postponed its IPO plans earlier this year due to changes in market sentiment, which triggered high volatility. At the start of the year, ET reported that Pepperfry was in talks to
raise $250-$300 million through its public issue.

The company has appointed investment banks JP Morgan and ICICI Bank to lead the IPO effort. The Mumbai-based ecommerce player was last valued at around $500 million when it raised capital in 2020.

Meanwhile, Pepperfry – which is among the last few standalone online furniture platforms – reported over 22% growth in revenue from operations at almost Rs 247 crore in FY22. The startup saw its revenue drop by 10% in FY21 because of Covid-19. It earns revenue from the commissions it charges for sales on its platform.

The company recorded a gross merchandise value of Rs 1,185 crore in the same period. Its losses increased by 83% to Rs 194 crore in FY22.

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In an interaction with ET, Pepperfry cofounder and CEO Ambareesh Murty said the widening losses were due to expenses such as employee salaries and marketing spends.

Another expense that has shot up is inventory costs, which increased over six-fold to more than Rs 20 crore. Murty attributed this to the opening of 140 physical stores, called Pepperfry Studios. He said these stores now generate about 36% of the company’s sales, and that 99% of sales are generated through its own channels.

“We piloted selling on Amazon and Flipkart, but that was less than 1% of our business division,” Murty said. Marketplaces have continued to invest in the furniture category, even as Urban Ladder, the other furniture-focussed, new-economy company, was acquired by Reliance Industries in November 2020.

Murty said the company ramped up its tech hiring last year to include technologies such as augmented and virtual reality, and also doubled down on promotions through celebrities such as Saif Ali Khan and Kareena Kapoor. Murty expects revenue to increase going forward, without a corresponding increase in costs due to operating leverage. In the previous fiscal, the company also ramped up its efforts to increase sales to above pre-Covid levels.

“Our entire rebase task ended in March,” said Murty. “So therefore what you will see in subsequent quarters in this financial year is the fact that revenues would be going up and basically marketing as a cost of overall sales would be coming down.”

The founders have also been busy prepping for the IPO over the past year, relocating Pepperfry from the Cayman Islands to Mumbai. They had registered the company in the Cayman Islands as the earlier plan was to go public in the US. They changed their strategy because, according to Indian capital market regulations, a foreign-registered company cannot conduct an IPO in India.

The company also changed its board composition, roping in independent directors to meet local capital market laws. Rules require the 33% of the board to be independent directors if the chairman is an independent director. The company appointed Sanjay Baweja, CEO of OnMobile Global, and Malini Parmar, cofounder of Stonesup.in, as independent directors in September.

News of Pepperfry’s IPO plan comes at a time when several tech companies’ have put their public listings on hold. Healthtech startup Pharmeasy recently decided to withdraw its IPO application after receiving Sebi’s clearance, citing market conditions, while SoftBank-backed Oyo Hotels and Homes and ecommerce company Snapdeal are yet to get the regulator’s nod to go public.