Unicomerce Soars on Debut: IPO Success Fuels Expectations for Growth
Unicomerce, a leading provider of online retail software services, experienced a stellar debut on the stock exchanges, listing with an over 100% premium to its issue price. The company, which serves over 3,500 online businesses, saw its stock double from its initial offering price, reflecting strong investor confidence in its future prospects.
Kunal Bal, Promoter and Non-Executive Director of Unicomerce, joined a post-listing discussion to address the company’s plans for growth. Bal highlighted the immense potential of the Indian e-commerce sector, which is currently growing at a rate of 4-5 billion shipments annually and is set to surge further, mirroring the trajectory of China’s 150 billion shipments. "Unicomerce is a market leader in the e-commerce enablement space," he stated, emphasizing the company’s role in providing essential software solutions to businesses, from warehouse management to inventory management, and its ability to capitalize on the expanding market.
"We anticipate that e-commerce shipments in India will grow at about 25% a year on a CAGR basis," Bal said, citing the company’s historical growth rate of 35% CAGR during the last three fiscal years, although admitting that Covid-19’s impact had contributed to heightened growth in some periods.
With the company’s profitability already established through its software-as-a-service (SaaS) model, Bal expects continued margin expansion. "Our anticipation would be that we would continue to grow our profits," he stated, pointing to the inherent operating leverage in the business model. "Our fixed costs actually don’t grow with scale," he explained, adding that a significant portion of revenue growth is directly translated into profit increases.
Bal outlined several key growth drivers for the company, including the intrinsic expansion of the e-commerce market, adding new clients to its portfolio, broadening the scope of services offered, and leveraging pricing power. "Historically, we’ve grown give or take about 500 basis points higher than e-commerce volume growth," he mentioned, attributing it to their commitment to innovation and customer-centricity. The introduction of new products tailored to cater to the increasing complexity of e-commerce businesses is a prime example of their proactive approach.
Unicomerce’s international expansion into markets like the Middle East and Southeast Asia presents further growth opportunities. "We will anticipate that in the future we want to sign up more customers in these markets," said Bal, noting the lucrative potential of these regions.
The company’s initial success on the stock exchanges signals a promising future, with stakeholders eagerly awaiting the delivery on the company’s ambitious growth plans. The management’s commitment to innovation, understanding their customers’ evolving needs, and capitalizing on the inherent growth potential of the Indian e-commerce market has positioned Unicomerce as a company to watch in the years to come.
Unicomerce’s Stellar Debut: A 100% Premium Listing & A Look at the Future
Unicomerce, an online retail software services provider, has made a spectacular debut on the stock exchanges. The company’s shares, which listed with a premium of over 100% to its issue price, have doubled in value from their initial offering price. This impressive performance has positioned Unicomerce as a strong player in the evolving Indian e-commerce market. Kunal Bal, a promoter and non-executive director at Unicomerce, joins us to discuss the company’s post-listing plans and the exciting opportunities that lie ahead.
Key Takeaways:
- Unicomerce’s strong listing reflects investor confidence in its market-leading position and growth potential.
- E-commerce in India is expected to grow at a CAGR of 25%, providing a major tailwind for Unicomerce’s business.
- The company is focused on leveraging its operating leverage to drive profitable growth, with a strong track record of margin expansion.
- Unicomerce is exploring both organic growth through new product launches and expansion into international markets, especially in the Middle East and Southeast Asia.
A Market Leader Riding the E-commerce Wave
“It’s obviously a very humbling moment for all of us and our teams at Unicomerce,” Bal says, expressing his gratitude for the successful listing. Unicomerce, a leader in the e-commerce enablement software-as-a-service (SaaS) space, serves over 3,500 businesses selling online. "These could be digital native brands or digital migrant Brands, traditional brands that have decided to grow their businesses online," he explains.
Bal highlights the vast potential of the Indian e-commerce market, which currently handles 4-5 billion shipments, compared to China’s staggering 150 billion shipments. “That’s the Headroom left to grow for e-commerce in India,” Bal emphasizes. Unicomerce acts as a crucial “picks and shovels” company, providing the software foundation for businesses operating within this burgeoning sector. The company offers a suite of solutions, including warehouse management software, inventory management software, and other critical backend tools.
Sustaining High Growth and Profitability
Unicomerce has consistently delivered strong results, boasting a 35% compound annual growth rate (CAGR) over the past three years. While Bal acknowledges that the growth rate has slowed slightly in recent years, he reaffirms his confidence in the long-term trajectory of the e-commerce market. "We anticipate that the e-commerce shipments in India will grow at about 25% a year on a CAGR basis," he says.
“Historically unicommerce has delivered…e-commerce market growth Plus+ growth,” Bal adds. This impressive growth is not solely driven by top-line expansion, as Unicomerce has also achieved profitability through its SaaS-based pricing model. "Given it’s a pure software company, we don’t do any operations…we manage them virtually using our software," Bal explains. As e-commerce volumes increase, Unicomerce’s per-unit pricing model ensures that revenues grow alongside the market.
Unlocking the Potential for Sustainable Growth
While the market’s expected growth rate of 25% is substantial, Bal believes that Unicomerce can outperform this pace. “We have been delivering industry-leading growth,” he states. “So, we should idly be growing faster than that.”
The company’s strong operating leverage plays a key role in driving profitability. "Our fixed costs actually don’t grow with scale," Bal reveals. “In fact, our fixed cost, as a percentage of our Revenue, have been dropping,” he adds. This means that incremental revenue growth has a significant impact on the bottom line. “We do anticipate that a significant part of the incremental Revenue growth we will see this year, as was the case last year, will grow into the bottom line and ensure that we are continuing to grow our margins,” Bal says.
Multiple Avenues for Revenue Growth
Unicomerce’s growth trajectory is fueled by several key factors. The company benefits directly from the inherent growth of e-commerce volumes, a driving force for the entire industry. However, Unicomerce also leverages its own strategic initiatives to drive growth:
- Client Acquisition: Unicomerce is actively adding new clients to its portfolio, expanding its reach within the e-commerce ecosystem.
- Service Expansion: The company continues to develop and roll out new software products, catering to the increasing complexity of e-commerce operations.
- Pricing Power: Unicomerce’s ability to increase prices in line with the growth of e-commerce volumes provides a further boost to its revenue stream.
Bal estimates that Unicomerce has historically outpaced e-commerce volume growth by about 500 basis points. "For instance, in FY24, we believe that the volume growth was in the 8-9-10% range, and our revenues grew 15% plus in FY24," he explains.
Embracing Innovation and International Expansion
Unicomerce is focused on staying ahead of the curve in the rapidly evolving e-commerce landscape. The company has recently launched two new products that address the growing complexity of e-commerce businesses. “As we are realizing that the e-commerce…Brands who are selling on e-commerce are growing in size, the complexity in their businesses is growing very dramatically," Bal observes. “And as the complexity grows, they can no longer work on a spreadsheet; they need software.” These new products are being rolled out across Unicomerce’s vast customer base.
Unicomerce is also expanding into international markets, currently operating in six countries, primarily in the Middle East and Southeast Asia. “We currently have some good customers there, like Landmark Group and others," Bal reveals. “However, we will anticipate that, in the future, we want to sign up more customers in these markets.”
The Future is Bright for Unicomerce
With its strong market position, robust growth strategy, and a committed leadership team, Unicomerce is well-positioned to capitalize on the incredible potential of the Indian e-commerce market. The company’s successful listing is a testament to investor confidence in its ability to deliver sustained growth and profitability. As the Indian e-commerce landscape continues to evolve, Unicomerce is ready to lead the way, providing the essential software infrastructure that empowers businesses to succeed in this dynamic environment.
