Tatas quietly mint a unicorn with CaratLane

Tatas quietly mint a unicorn with CaratLane

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Madhav Chanchani

121 reads
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Madhav Chanchani

121 reads

E-commerce startups acquired by traditional retailers & conglomerates have not thrived. But Titan's CaratLane deal stands out, with the company turning profitable and posting record revenues. Now, there may be a big re-rating in the valuation of the business

September 29, 2022

16 MINS READ

When Titan acquired a majority stake in online jewellery brand CaratLane Trading in 2016, India’s e-commerce story was faltering. Flipkart, the country’s largest online retailer, saw its gross merchandise value (GMV) stagnate, with investors subsequently slashing its valuation.

India’s consumer internet market was also in a state of disarray. Having failed to build out a business model, a slew of vertical-focused online retailers found themselves out of favour with investors. The likes of FabFurnish, Babyoye, and EkStop were subsequently acquired by large conglomerates such as the Future Group, the Mahindra Group, and Godrej, respectively.

It was against this backdrop that, in May 2016, Tata Group-owned Titan acquired Tiger Global’s entire 62% stake in CaratLane. At Rs 357 crore, the deal was still good enough to give Tiger Global—the primary backer of India’s internet story and the biggest shareholder in Flipkart—a decent return. The New York-based investment firm had invested a total of about Rs 284 crore in the Chennai-headquartered startup. CaratLane, though, saw its valuation drop—from 710 crore ($106 million) in its 2015 fundraise to Rs 575 crore ($86 million). CaratLane had revenues of Rs 141 crore in the year ended March 2016, clocking a net loss of Rs 63 crore.

Six years later, Tata’s faith in CaratLane stands vindicated. The quarter ended June 2022 was the online jeweller’s best quarter ever, with revenues soaring over 200% to Rs 483 crore. That is more revenue in a quarter than it made for the entire year ended March 2019. The company also reported a profit before tax of Rs 26.7 crore for the quarter. 

Already, CaratLane is bigger than Titan’s eyewear business, which was launched in 2013 and had revenues of Rs 517 crore in the year ended March 2022. And it is catching up with the watches business, which had revenues of Rs 785 crore in the June quarter as compared to CaratLane’s Rs 483 crore.

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