Spirit W | E-comm a lucrative investment option: Reevolv's Shilpa Bhattar

With more than 9 years of experience in Investment Banking and Research, Shilpa Bhattar, Co-founder of Reevolv leads the financial advisory vertical. She has worked with Enam Securities in their Corporate Advisory group where she was responsible for private equity fund raising and mergers and acquisitions. She brings with her immense experience in origination, structuring and executing transactions. Prior to Enam she was associated with Kotak Mahindra Bank (SME focused advisory group) and Morgan Stanley. She has worked across sectors – Power, Retail, Logistics, Infrastructure, Telecom & Financial services etc. 

Adgully caught up with Shilpa Bhattar, Co-founder of Reevolv to learn more about the high points of her journey at the company.

Bhattar who had her mind set on becoming an entrepreneur opines that it is always difficult to quit a high profile job and build things from scratch. It goes without saying that she has been successful in her endeavours and coincidentally it is exactly three years today since she joined Reevolv.

Sharing her thoughts on how the industry has evolved over the years, she avers, “I think the industry has changed by leaps and bounds. Let’s look at it from two perspectives: Firstly, the market side (demand  perspective).  Around ten years back the need for investment banking services was more at larger company levels with big companies going for IPO, Private Equity, M&A etc. Today this has completely changed.  A large number of midsized companies are looking to raise equity or pursue acquisition opportunities. Hence the need for specialized investment banking services has increased manifold. Also a lot of promoters have started understanding the value of a good investment banker.”

“Secondly, looking at the industry side (supply perspective), as with any other space even investment banking has seen a large number of new entrants. Hence what has happened is a lot of inexperienced people have promised promoters about fund raising etc. and they have failed. What this has done is that some promoters are losing confidence over the investment banking community,” Bhattar added.

The need for research has drastically increased as decision making is becoming more and more data driven. Also a lot of sunrise sectors are emerging where investors are looking for high quality research to take informed decisions.

Her stint with Reevolv has been fascinating. She said, “My partner Kaustubh has been extremely supportive. Being a Chartered Account and a CFA pass-out I obviously understand finance well. However when we launched the Industry/Market Research vertical I was not sure whether I would be up to it. However we worked collectively as a team and our first report on the “Indian Salon Industry” received an overwhelming response. This was really the highest point of my journey.”

Since then, they have worked on Eye wear, Footwear, Ladies handbags, Salon Products, QSR and Healthcare valuations, Ecommerce Deal Multiples etc. Each Industry Report is an exciting challenge. To go on - ground and all out keeps them on their toes and excited all the time. She considers being part of Reevolv an amazing journey in her career.

Though Reevolv stands tall among its competition, the services that bring in major revenues are Consulting and Research which are the main verticals contributing to their top line. Currently consulting has a higher share, however they believe Research will contribute more in the next few years.

Reevolv has recently launched a report on E-Commerce space given the higher levels of interest from the investor community in the range of E-Commerce companies and the growth prospects associated with the same. The report covers 10 companies in E-Commerce space such as Book My Show, Flipkart, Snapdeal, Myntra etc. with company profiles, financials and deal multiples for private equity deals on these companies covering present and historic data. 

Sharing her views on the growth in E-commerce segment, Bhattar said, “E-Commerce by and large remains one of the most attractive segment. The industry still being in the evolution stage offers lot of opportunities for stake holders. The fact that the number of internet users in India is increasing at an exponential rate, coupled with lower internet penetration, the E-Commerce industry is poised for a higher growth in Indian context. With market leaders trying to consolidate their respective positions, smaller players in the space can either look to organically grow or unlock value by merging into large players of the industry.”

What value will this research get on the table for Reevolv? In answer to this she said, “Research is a very broad term and various types of research reports serve varied purposes. e.g. the Reevolv Industry report is targeted towards stake holders of the particular industry, which gives insights on the structure of the industry, market size of the industry, various business model adopted by companies, key challenges, key success factors, growth drivers, profiles of the companies in that industry with detailed financials etc. This content helps in better understanding of the landscape of a particular industry. These reports are consumed by all the stake holders right from the large players to a small distributor as it offers a significant insight on the industry and most importantly get a quantitative base for decision making.”

Also it is not a hidden fact that global players eye Indian E-Commerce market as a lucrative investment option. Elaborating on the same she said, “It is certainly a lucrative option as discussed earlier, however one cannot ignore certain risks associated with the business model. As we have observed, most of the players have shifted from inventory model to market place model, thereby reducing their capital. International E- Commerce companies however leverage on inventory model which offers economies of scale coupled with state of the art supply chain and logistics to deliver value to the consumers. In the Indian scenario global players like Amazon have also ventured in E-Commerce space with market place model. The other challenge is to be able to sustain till the operations break even, initial losses also act as an entry barrier to companies with weaker war chest.”

In her opinion, the industry will remain fairly attractive both for foreign and domestic players. The industry will witness significant consolidation, as seen from the fact that Flipkart acquired Myntra in a recent transaction.

Also looking at the growing research boutiques and organizations there is surely a need for quality research for companies across the spectrum. “The awareness about need for informed decision making in businesses is increasing day by day. Hence companies are inclined to take business decision based on qualified data. This demand for research across cross section of the industry will lead to increasing demand for research boutiques,” she added. 

The other segment of Reevolv Research is the Valuation and Deal Multiple reports. Every company in its life cycle comes at a juncture where it feels the need for getting valued for various reasons. Reevolv’s valuation report offers valuation in a particular industry of the various companies which have been invested by Private Equity Funds or any other investor. Also they derive valuation from the M&A transactions. The valuation numbers are derived by proprietary analysis methods to arrive at accurate valuation numbers backed by sound analysis. In this segment Reevolv has covered Healthcare, Quick Service Restaurants, E- Commerce and Processed foods industries.

Reevolv also offers significant insights on the supply side by detailed consumer surveys to offer the consumer insights on various products and services across the consumer industry. This is a vital component of their research. In addition to published reports they also offer customized research services to their clients, where the scope of the research is derived based on client requirements.

In terms of vision Bhattar informed that the focus will be more on Research and adding more published reports to their bouquet of research reports. In the near future they plan to offer subscription service for their customers to access all their reports. The other verticals of consulting and financial advisory will also see significant growth owing to the synergies across verticals.

Bhattar’s key strength is in understanding that finance cannot be separated from business and on ground realities. In this regard she stated “We focus on financial analysis in sync with the on ground process and business realities. Kaustubh’s vast experience in business process improvement and operations consulting helps Reevolv build a differentiator to its peers. Similarly, we are one of the very few firms who have such deep industry research expertise. That is opening a lot of opportunities for us. Promoters like the fact that we already have a lot of sector expertise before we speak to them. They appreciate this fact and hence value our suggestions.”

Undoubtedly, the consulting and research industry is witnessing a surge in growth, and hence one can observe equally increasing competition. “With increasing awareness and demand for research irrespective of the industry or size of the company, we believe research companies have a bright future. This is also evident from the fact that investors are also actively seeking research and consulting companies for investment,” said Bhattar concluding an interesting and informative interaction.  | By Aanchal Kohli | Twitter: @aanchalkohli