Licious eyes IPO in 24 months, 500 stores in five years

The fresh meat and seafood delivery startup Licious plans to set up 500 stores nationwide within the next five years as part of an omnichannel strategy.

The aim is to attract new users in the offline channel and encourage them to transact online as well.

The move would also help the company in its efforts to achieve profitability and go for an initial public offering (IPO) in the next 24 months, according to the sources.

The stores would be set up in about 20 Indian cities, but most of them would be established in about eight cities.

The company plans to increase the store count to 40 across two or three cities by the end of this fiscal. Temasek-backed Licious has about $100 million to fund such expansion.

The firm plans a pre-IPO funding round sometime in 2026.

“In the past two years, the firm has focused on long-term sourcing contracts related to meat and seafood, which ensures stability in sourcing and pricing,” said a person familiar with the company’s strategy.

“It is a farm-to-fork model which gives them control over wastage and cost.

"The wastage has reduced from 6 per cent to 4 per cent.”

Timely access to customer purchase and consumption data enables about 4 per cent wastage, compared to global players in the perishables space operating at over 10 per cent.

The firm aims to cut down this further to 1.5 per cent by improvising supply chain and last mile cluster tech.

Licious aims to turn profitable on earnings before interest, tax, depreciation and amortisation (Ebitda) basis by March of this year.

With an impressive annual revenue run rate of approximately Rs 850 crore, the company has seen a notable increase in monthly revenue, rising from Rs 60 crore to about Rs 72 crore year-on-year (Y-o-Y).

Growth trajectory

The platform is expecting to achieve a revenue run rate of Rs 1,200 crore by March 2025.

This means it expects to have a monthly revenue run rate of Rs 100 crore.

Out of this, Rs 90 crore may come via app, while rest of the revenue may come from the new retail stores.

The monthly cash burn has reduced to about Rs 12 crore from Rs 26 crore on Y-o-Y basis.

The firm is looking to further reduce this to about Rs 10 crore.

The gross margins have improved from -5 per cent to 30 per cent, according to the sources.

“We have built a resilient business and a dominant share in branded meat and seafood consumption - a large, unorganised market currently.

"With investments into a vertically integrated business, we are looking forward to the next phase of profitable growth involving an omnichannel strategy,” said a company spokesperson in response to queries.

For FY23, the company reported 9 per cent year-on-year growth in revenue to Rs 748 crore.

The loss for the year was reduced by about 38 per cent to Rs 529 crore.

Founding story

Licious was founded by Abhay Hanjura, a Bangalore University science graduate along with his friend Vivek Gupta, a chartered accountant, after having a poor meat buying experience.

After successfully testing its technology and business model, Licious launched its service in 2015.

The same year, it received an undisclosed investment from former top Infosys executive TV Mohandas Pai along with Kanwaljit Singh, co-founder of venture capital firm Fireside Ventures.

At that time, the venture enabled customers to place the order through an app, web and telephone call.

The startup which has 5,000 employees is now disrupting the $40 billion Indian meat industry.

It is witnessing a monthly traffic of 1.2 million consumers.

About 80 per cent of the business happens on the Licious app.

Besides unorganised players, Licious primarily competes with Amazon-backed FreshToHome.

The firm is aiming to reach 30 million households from the current base of four million.

Licious currently has an average order value (AOV) of around Rs 600, up from Rs 500 from 3-4 years ago.

Subscribers & investors

Licious also recently introduced a subscription called ‘Infiniti’.

The loyalty program has attracted 1.5 lakh active subscribers contributing to 40 per cent of monthly business.

The firm is targeting 250,000 active subscribers by the end of this fiscal.

The firm provides data-driven delivery within 30 - 90 minutes depending on micro-market densities.

The company has raised about $490 million from investors such as Vertex Ventures, Bertelsmann India Investments, 3one4 Capital. Some of the top angel investors that have backed the firm include the Kamath brothers and Boat’s Aman Gupta.

The firm was last valued at $1.2 billion.

It raised $150 million in March 2022, six months after the company became the first direct-to-consumer (D2C) unicorn or a startup with over $1 billion valuation in the country.