August 5, 2024
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Stock Market

Unicommerce eSolutions IPO Review – GMP, Financials And More

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Stock Market

Unicommerce eSolutions IPO Review – GMP, Financials And More

Unicommerce eSolutions Company is coming up with its IPO offer for sale worth Rs. 276.57 crores, which will open on 6^th August 2024. The issue will close on 8^th August 2024 and be listed on the exchange on 13^th August 2024. In this article, we will look at Unicommerce eSolutions IPO Review and analyze its strengths and weaknesses. Keep reading to learn about the company.

Unicommerce eSolutions IPO Review – About The Company

The company was incorporated in 2012. This company is an e-commerce enablement SaaS platform in the transaction processing layer. It helps sellers, brands, and logistics firms manage their e-commerce operations.

The company offers a suite of products including warehouse management, order management, and omni-channel retail management systems. These products help clients handle various lines of supply chains in their operations.

The company serves a wide range of clients, from small businesses to large enterprises, across various sectors like fashion, electronics, and FMCG. As of March 2024, it processed around 772 million items annually items.

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As of March 31st, 2024, the technology and partner integrations include 131 WebStore and Marketplaces integrations, Logistics Partners comprising 101 and 11 ERPs, POS, and other systems integrations.

It has also started expanding internationally, focusing on Southeast Asia and the Middle East. The company had 43 enterprise clients in International Markets as of March 2024.

Some of the prominent clients involve boAt, mamaearth, lenskart, Urban Company, Zivame, cello, Xpressbees, Mensa Brands, Pharmeasy, fabindia, Emami, and others.

Unicommerce eSolutions IPO Review – About The Industry

The eCommerce enablement SaaS industry provides solutions for online retail operations. These products help businesses manage orders, inventory, and fulfillment across multiple channels.

The industry serves a growing market as more brands and sellers expand online. It addresses challenges in supply chain management, order processing, and customer delivery.

The Indian retail market is expected to reach US$1.3-1.4 trillion by 2027. This growth creates opportunities for SaaS providers. The Indian SaaS market was US$12 billion in FY2023. It is projected to grow at 33% annually, reaching US$38 billion by FY2027.

The eCommerce enablement SaaS industry has a promising outlook. eCommerce is expected to grow at 23% annually until 2027. It may reach US$140 billion in India.

This growth outpaces traditional retail channels. It creates a demand for SaaS solutions. More businesses will need tools to manage their online operations. The industry will likely see continued innovation. New products might be one of the challenges that companies face in the eCommerce SaaS Industry.

Unicommerce eSolutions IPO Review – Financial Highlights

Unicommerce eSolutions reported revenue from operations of Rs. 103.58 crores in FY24, up 15.01% from Rs. 90.05 crores in FY23. Net Profits in FY24 were Rs. 13.07 crore, an increase of 102% from Rs. 6.47 crore in FY23. There was an improvement in Employee benefits expenses, and server hosting expenses YoY. Employee expenses take up the majority of the revenue around 63%.

The basic earnings per share in FY24 was Rs. 1.30 per share which was an improvement of 103.12% from the previous year’s Rs. 0.64 per share. The improvement in EPS is based on control of the expenses with revenue increase.

As Software companies are more equity-infused, the company’s RoE in FY24 stood at 17.36% compared to 13.89% in FY23. There was an improvement in RoE due to an increase in net profits. The company has paid interest cost in FY24, which relates to better returns through RoCE which stood at 25.93% compared to 11.46% in FY23. Here, with debt, the company was able to earn better returns to the shareholders.

Unicommerce eSolutions recognises its revenue from operations under Software Services in the field of Software as a Service (SaaS). Geographically India contributed 96.32% of the revenue, and the rest of the world contributed – 3.67% in FY24.

Unicommerce eSolutions – Key Players

The company mentioned that similar to their business or even to a comparable size, there are no listed Companies in their RHP.

Strengths of the Company

Market Presence: The company operates India’s largest e-commerce enablement SaaS platform in the transaction processing layer. In FY24, they had a round 791 million annual volume of order items for 795 Enterprise clients and 2,707 Small and Medium Business (SMB) clients, acting as their service provider for their e-commerce operations.
Product Adaptability: The company offers plug-and-play integrations on proprietary tech platforms across different businesses. Adapting to client’s operations like SKUs, locations, facilities, and other complexities. They address major e-commerce challenges like inventory management, order processing, and regulatory compliance.
Customer Retention: The company has built a large, diverse client base of marquee Indian and global brands across various sectors. It consistently achieved high net revenue retention rates, demonstrating its ability to upsell and cross-sell products to existing clients.
Technology Strength: The company’s proprietary technology platform provides high scalability and adaptability across industries. It can handle peak volumes of over 5 million daily order items while maintaining efficiency, data security, and concurrency for client’s operations.
Financial Stability: The company has demonstrated consistent, profitable growth. It has increased revenue, maintained high gross margins, and improved profitability metrics.

Weaknesses of the Company

Opportunity for Competitives: The company faces intense competition from larger, more established rivals with greater resources. These competitors can leverage their size, reputation, and financial strength to offer more competitive products, potentially eroding the company’s market share and profitability.
International Markets: Unicommerce earns around 3.67% of the revenue from the rest of the world in FY24. Any slowdown in business in India can hamper their growth. Diversification in overseas markets can help the company to reduce dependence from domestic markets.
Dependent on Dropships: The business relies heavily on client’s dropship volumes, which may fluctuate. Any changes in the client’s dropship arrangements or reduced allocations to the company could impact its revenue and growth prospects.
Seasonal Business: The company’s business is subject to seasonal fluctuations, particularly around e-commerce promotional periods. This seasonality makes demand forecasting challenging and could lead to resource allocation issues or missed opportunities during peak periods.
Open Source Software: The company’s use of open-source software in its products poses potential risks. It could face legal challenges, be required to publicly release proprietary code, or need to re-engineer its products, potentially disrupting operations.