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Pepperfry looks to file draft IPO papers next quarter

Omnichannel furniture seller Pepperfry is likely to file draft papers for an Initial Public Offering (IPO) in the October-December quarter, and aims to list publicly next year, a person aware of the matter said.

The Goldman Sachs-backed startup postponed its IPO plan earlier this year due to an adverse market.

ET reported earlier this year that Pepperfry was
in talks to raise $250-$300 million through the IPO.

“They are looking to file the draft red herring prospectus (DRHP) (with India’s capital markets regulator Sebi) in the subsequent quarter,” the source said.

The company will take a final call on the matter by November, the person added.

The company has appointed JP Morgan and

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 – among the last few standalone online furniture platforms – said revenue from operations grew over 22% to about Rs 247 crore in FY22.

This came on a drop in the metric by 10% in FY21 because of Covid-19.

Pepperfry earns revenue from the commissions it charges for sales on its platform.

The company posted a gross merchandise value (GMV) of Rs 1,185 crore in FY22. Losses increased by 83% to Rs 194 crore in the same period.


Illustration: Rahul Awasthi

Pepperfry cofounder and chief executive Ambareesh Murty told ET that losses widened due to higher expenses, including employee salaries and marketing.

Inventory costs also increased over six-fold to more than Rs 20 crore.

Murty attributed this to the opening of 140 physical stores, called Pepperfry Studios.

These stores, he said, now generate about 36% of its 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.

The e-commerce marketplaces have continued to invest in the furniture category, even as Urban Ladder, the other furniture-focussed, new-economy company, was acquired by

in November 2020.

Murty said Pepperfry ramped up its tech hiring last year to include technologies such as augmented and virtual reality, and also doubled down on promotions through Bollywood celebrities such as Saif Ali Khan and Kareena Kapoor.

He said revenue was expected to increase going forward, without a corresponding increase in costs due to operating leverage. In the previous fiscal year, the company also made an effort to increase sales to above pre-Covid-19 levels.

“Our entire rebase task ended in March,” said Murty. “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 relocated its headquarters from the Cayman Islands to Mumbai last year. The earlier plan was to list in the US market.

The strategy was changed as the Securities and Exchange Board of India (Sebi) does not allow foreign-registered companies to go in for an IPO in India.

The company also changed its board composition, roping in independent directors to meet local capital market laws.

Rules require that 33% of the board should have independent directors if the chairman is an independent director.

The company appointed Sanjay Baweja, CEO of

, and Malini Parmar, cofounder of Stonesup.in, as independent directors in September.

Several tech companies have put their public market listings on hold.

Healthtech startup Pharmeasy recently decided to withdraw its IPO application despite Sebi’s clearance, citing market conditions, while SoftBank-backed Oyo Hotels and Homes and ecommerce company Snapdeal have yet to get the capital markets regulator’s nod to go public.

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