Online bakery brand, Gurugram-based Bakingo reported very impressive fiscal-end results March 2024 to close the FY at ₹208.7 crore, in terms of revenues. While its revenue numbers indicate a great increase of 43% on-year from the ₹145.7 crore clocked in FY23, Bakingo recorded increased losses since the company’s primary focus continued on expansion.
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Founded by Himanshu Chawla, Shrey Sehgal, and Suman Patra, Bakingo offers a variety of cakes and desserts, such as its signature offerings: Cheesecake, Gourmet Cakes, and Jar Cakes. It boasts over 100 stock-keeping units (SKUs). The quality and variety that Bakingo brings to the table have made it a fast-rising star in the online dessert market.
The revenue growth reflects Bakingo’s successful efforts to capture a larger market share amid increasing consumer demand for baked goods. The online bakery sector has seen a surge in popularity, driven by the convenience of home delivery and a growing preference for artisanal products.
Though revenues are growing with great vigor, the cost for Bakingo was on a rising trajectory of operational costs and far ahead of revenue growth. Product procurement accounted for 42.2% of total expenses, jumping 43% to ₹90 crore in FY24. Employee benefits shot up by 40% to ₹31.6 crore and advertising increased by 38% to ₹27.7 crore. The company’s platform commission fees increased substantially, too: 65% to ₹26.2 crore.
The cost of these escalated costs is such that Bakingo’s total expenses have gone up by 46%, reaching ₹213.8 crore in FY24 as compared to ₹146.3 crore in the preceding fiscal year. The company has incurred losses at ₹5.3 crore in FY24, which shows the financial pressures tied to its aggressive growth strategy. Bakingo’s ROCE and EBITDA margin stand at -6.05% and -0.98%, respectively, which reflects the challenges faced in this period of expansion.
Bakingo’s expense-to-revenue ratio was at 1.02, which meant that it spent a tad more than it earned, yet such an issue had kept the company in losses. Total current assets were reported at ₹96.5 crore during FY24 and would leave Bakingo well-equipped to take care of its immediate operational needs.
To date, Bakingo has raised a total of $16 million (approximately ₹130 crore) in funding, with its maiden round led by Faering Capital last year, achieving a valuation of ₹571 crore. According to estimates, the enterprise value to revenue multiple for Bakingo stands at 2.7X.
Bakingo’s FY24 financials reveal a company that is on a growth trajectory and has successfully increased its revenue in a competitive market. However, the increase in operational costs has resulted in marginal losses, thus highlighting the challenges that come with rapid expansion. As Bakingo continues to improve its product offerings and distribution network, stakeholders will be keenly observing its strategies to improve profitability while maintaining its growth momentum.
With a focus on quality and customer satisfaction, Bakingo is well-positioned to capitalize on its increasing brand recognition and market presence in the changing online baking landscape. The ability of the company to manage costs effectively while scaling operations will be critical in achieving sustainable growth in the future.
