In a move that reflects the consolidation trend in India’s B2B commerce space, Bengaluru headquartered unicorn Udaan has acquired ShopKirana, an Indore-based retail-tech startup, in an all-stock deal. The deal is valued at INR 88.5 million (~INR 762 crore) and is a key milestone for Udaan as it prepares for an IPO and wants to strengthen its leadership in high-frequency categories like FMCG, Staples and HoReCa (Hotel, Restaurant and Catering).
Shopkirana’s acquisition comes after Udaan’s recent USD 114 million (~INR 982 crore) Series G funding led by M&G Investments and Lightspeed Venture Partners and is designed to drive profitable growth at scale by increasing operational efficiency and deepening market reach, especially in India’s underserved Tier 2 and Tier 3 cities.
Udaan-Shopkirana Acquisition: A Merger of Strengths
ShopKirana was founded in 2015 and has built its reputation by digitising procurement for kirana stores across cities like Indore, Bhopal, Lucknow, Agra, Surat and Meerut. It offered transparent pricing and efficient last-mile delivery. The startup also had its private label brand Kisan Kirana focused on staples like rice and pulses.
Udaan was founded in 2016 and has emerged as one of India’s largest B2B e-commerce platforms across verticals like FMCG, pharma, fresh produce and working capital solutions via its fintech arm UdaanCapital.
“This is a strategic milestone in our journey to the IPO and beyond,” said Vaibhav Gupta, Co-founder and CEO of Udaan. “ShopKirana has a great team that shares our belief in becoming the ‘preferred supplier to shopkeepers’ and ‘preferred partner to brands’. Together we will deliver on our agenda of growth with profitability at scale.”
Udaan-Shopkirana Deal Details
As part of the deal, Udaan, through its Singapore-based parent Trustroot Internet’s subsidiary Hiveloop Technology (HEPL), will issue 1.68 crore shares to Info Edge, which held a 26.14% stake in ShopKirana through Startup Investments Holding (SIHL). These shares will translate to 0.91% of HEPL on a fully diluted basis, valuing Info Edge’s holding at USD 23.13 million (~INR 199 crore) and, by extension, ShopKirana at USD 88.5 million.
ShopKirana’s broader shareholder group, which includes Sixth Sense Ventures, Oman India Joint Investment Fund and the founding team, will own 7-8% of Udaan post acquisition.
Financials & Strategy
ShopKirana reported INR 639.16 crore in gross revenue for FY24, a 6.26% decline from the previous year. But it reduced its net loss by 30% to INR 55 crore, which is a clear effort to clean up the business, possibly to make it more acquisition worthy.
Udaan, on the other hand, clocked INR 5,706 crore in revenue for FY24, the highest among Indian B2B commerce companies. The company has been focused on improving EBITDA and rationalising costs as it gets ready for IPO.
Shopkirana’s acquisition gives Udaan a stronger presence in smaller city markets and deeper penetration in FMCG and staples sectors, where ShopKirana has built relationships with kirana stores. With access to Udaan’s pan-India supply chain, credit infrastructure and tech backbone, the integration should unlock operating leverage and better unit economics.
From an investor perspective, the deal is part of a broader trend of consolidation as investor fatigue sets in the grocery commerce space.
But the all-stock deal is a low-risk acquisition for Udaan, which hopes ShopKirana can deliver upside over time. For Info Edge, the deal converts a non-strategic holding into a direct stake in an IPO bound company, which is more in line with its internet-focused investment portfolio.
Outlook
If the deal integrates well, Udaan can claim category leadership as it gets ready for its much-awaited IPO. Both companies are cost-conscious and want to be the backbone of India’s digital retail transformation. The combined entity will be the go-to platform for kiranas, brands and institutional buyers across the country.
As Sumit Ghorawat, Co-founder of ShopKirana, said: “This partnership brings together our FMCG expertise with Udaan’s national scale and infrastructure — we can take more brands to more retailers, more efficiently.”
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