Agritech sector set to boom

[ad_1]

MUMBAI : India’s agritech sector is likely to grow in scale and have 8-10 startups with more than a billion dollars in value each over the next five years, according to a new report by Avendus Capital.

The report titled‘Agritech-Leading next decade’s tech-first value creation’ said 2-3 companies will become worthy of launching initial public offerings (IPOs) over the next three to five years.

The report covered business-to-business (B2B) firms such as Absolute Foods, Arya.Ag, Dehaat, Farmart, Captain Fresh, Vegrow, Bighaat, Agnext and Bijak and business-to-consumer (B2C) firms such as Country Delight and Licious.

“Farming in India is characterized by relatively smaller farm sizes and lower yields per hectare vis-à-vis global counterparts. This, coupled with fragmented, inefficient supply chains and unorganized retail, lends a uniqueness to the market,” said Pankaj Naik, co-head, digital and technology investment banking at Avendus.

“These unique market characteristics have led Indian agritech players to build ‘India-first’ business models with a larger focus and scale on the output market linkage side. The market is also seeing ‘India-first’ technology innovations in precision agriculture, quality assessment and digital traceability that can each be a large global opportunity,” he added. The report highlighted how since 2010, almost $3 billion of funding has gone into backing more than 1,500 agritech companies in India, compared to the $45 billion raised globally by such firms. Around 17 Indian startups have crossed the critical mass of $100 million in annual revenues.

Agritech is anticipated to drive the next wave of technology-led impact with a compound annual growth rate (CAGR) of around 50% over the next five years, reaching $34 billion in gross merchandise value (GMV) by 2027, a sharp rise from the current $4 billion.

“This, given the sheer scale of the agriculture economy in India, will create tremendous stakeholder value. The IPO timelines for most of the companies are 3-5 years away. The precursor would be active participation of private growth investors in the sector, replicating the participation seen in consumer tech-focused companies over the last five years,” said Karan Sharma, co-head, digital and technology investment banking at Avendus.

As per the report, with increased rural India internet penetration and covid-19 driving structural changes in the supply chain, the last two years have seen a sharp turnaround for the sector. Almost $2 billion of capital was raised in the last two years (63% of total capital invested) in the space. In 2022, almost 1.2 billion went into the sector while for nine months ended September, $796 million was pumped into the sector.

By 2027, the agri value chain disruption potential is being pegged at $34 billion with almost 25 million farmers getting impacted, the report said.

Catch all the Corporate news and Updates on Live Mint.
Download The Mint News App to get Daily Market Updates & Live Business News.

More
Less

[ad_2]

Source link