Tata 1mg’s losses widen 139% to Rs 1,255 crore in FY23, revenue up 160%

The company’s costs are also likely to remain elevated in FY24 as it looks to increase its store count to 200-300 outlets by the end of this calendar year, which is a 4-5X jump from its current offline footprint.

Tata’s e-pharmacy, Tata 1mg, saw its losses widen by 139 percent in the previous financial year, dragged largely by input costs and other expenses. During the same year, the company’s revenues largely moved in tandem with its bottomline.

The Gurugram-based company saw its losses jump from Rs 526 crore in FY22 to Rs 1,255 crore in FY23, as per regulatory filings sourced from Tofler. During the same period, the company’s revenue from operations grew 160 percent from Rs 627 crore in FY22 to Rs 1,627 crore in the previous financial year.

Nearly 80 percent of its revenues came from the sale of medicines while the rest came from services like diagnostics, tests and others put together.

The healthcare startup's losses widened at a time when it is putting itself on a path to profitability and is hopeful of turning profits in the next two years.

Tata 1mg’s losses increased primarily on the back of mounting expenses in FY23. The company’s total expenses increased by 147 percent to Rs 2,894 core in FY23 from Rs 1,171 crore in FY22, the filings showed.

While its advertising expenses dropped in the year, it was offset by higher employee costs, among others, the company said.

The company’s costs are also likely to remain elevated in FY24 as it looks to increase its store count to 200-300 outlets by the end of this calendar year, which is a 4-5X jump from its current offline footprint. For its offline foray, it is targeting cities such as Bengaluru, Hyderabad and Mumbai, the company’s Chief Operating Officer, Tanmay Saksena, told Moneycontrol in an interaction earlier. 

Offline stores will, however, help Tata 1mg increase its revenue streams. As is the case for other players in the industry, even for Tata 1mg, the online average order value (AOV) is much higher at Rs 1,200-1,300 versus the Rs 600 AOV through offline channels.

Tata 1mg’s approach of offering add-on services at its offline stores is already helping it push up AOV. The company’s offline AOV was around Rs 600 nearly double the AOV of traditional pharmacies in the Rs 325-350 range.

Path to profitability

Saksena said Tata 1mg will not need to raise additional capital to fund its offline venture as its cash burn has halved on a year-on-year (YoY) basis to single-digit millions now and the existing capital pool was sufficient for its growth.

At the same time, the company is growing 70-80 percent YoY, according to Saksena, who did not reveal exact numbers. “We’re well positioned now and will turn profitable in the next two years. If we do it well, it may even come in a year’s time,” he added.

Tata Group acquired a majority stake in 1mg in June 2021 for about $250 million, according to reports. The company, which counts Kae Capital, Bill & Melinda Gates Foundation and several other entities among its backers, is now valued at $1.25 billion, according to data from Tracxn, a private market intelligence data provider.