Avendus bullish on agritech | Mint

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.