Jaipur's CarDekho Group is aiming for four to six quarters of profitability before it files for an initial public offering, according to Chief Executive Officer and co-founder Amit Jain.
"There's been a lot of learning from other tech companies, which have gone public. What we've picked from their playbook is taking a company public which is profitable is a good idea... I want to have at least four to six quarters of track record of profitability," Jain told NDTV Profit.
The startup group's revenue rose 46% to Rs 2,331 crore in FY23 from Rs 1,600 crore in FY22. Its loss had widened marginally to Rs 562 crore in FY23 from Rs 535 crore loss in FY22.
"Another learning is to go out with a story which is not unviable or unbelievable. Let's say I'm making a profit of Re 1, and I'm claiming I'll make Rs 100 in the next five years, the story should be more believable with track records. Another learning is to go public at the right valuation, and not overprice the IPO," he said.
Though CarDekho Group expects about 60% year-on-year growth in 2024, it shut down its used car retail business in May 2023, citing poor unit economics.
"I did not see a large profit pool getting created, unless the gross merchandise value of the vehicle actually becomes twice of what it is today," Jain explained.
"Then it can have some profits. The current average ticket size we were doing was about Rs 5-6 lakh per vehicle. It needs to be around Rs 12-15 lakh. It's a matter of time, maybe a decade or seven years, when that happens. Maybe we'll re-enter at that time," he said.
CarDekho also acquired Revv in December last year, and entered 2024 with a cash reserve of over Rs 1,300 crore, earmarked for both organic and inorganic growth projects.
"They're into self-drive rentals but we are now expanding it into long-term and short-term subscriptions. We're expanding it into a fleet of cars, which can ferry you around the city or intercity. So, we're looking at more larger addressable markets with Revv now, because self-drive market is very small as a total market," the Shark Tank investor said.
The aim is to look at more adjacencies within mobility, Jain said. "We are looking at models such as driver-as-a-service and car-as-a-service. We're also evaluating the retail space, how spare parts, batteries, etc., can be sold. We're looking at the right kind of assets available in the market with certain scale and will definitely be interested to partner with them," he said.
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