Tata 1mg pursued rapid growth during FY22 and FY23, with its revenue more than doubling each year. However, the company shifted its focus to profitability in the fiscal year ending March 2024. As a result, revenue grew by just 21%, while losses were reduced by 75% in FY24.
According to its consolidated financial statements from the Registrar of Companies (RoC), Tata 1mg’s revenue from operations increased to Rs 1,968 crore in FY24 from Rs 1,627 crore in FY23. Income from the sale of medicines constituted 81.3% of Tata 1mg’s total revenue, which increased by 24% to Rs 1,599 crore in FY24. Other revenue sources included lab test fees, patient support programs, advertising, and shipping.
Additionally, the Prashant Tandon-led company earned Rs 23 crore from interest, financial asset gains, and other miscellaneous avenues, bringing its total income to Rs 1,991 crore in FY24. Since 1mg operates with inventory, the cost of procuring medicines accounted for 56% of overall expenditure, growing by just 8.5% to Rs 1,289 crore in FY24.
Tata 1mg’s expenditures on employee benefits, information technology, legal, advertising, commissions, packaging, fulfillment, and other overheads increased total costs by 20.4% to Rs 2,303 crore in FY24. The company’s decent scale and controlled costs helped reduce losses by 75% to Rs 313 crore in FY24 from Rs 1,255 crore in FY23. Its EBITDA margin stood at -10.85% in FY24, with the company spending Rs 1.17 to earn a rupee in the previous fiscal year.
A primary reason for the substantial losses in FY23 was the FVTPL cost (non-cash in nature), which amounted to Rs 668 crore. Tata Digital acquired a 55% stake in 1mg in June 2021 and has since increased its stake to around 63.5%, with the e-medicine platform last valued at $1.25 billion. According to Fintrackr’s estimates, its enterprise value to revenue multiple stood at 4.87X.
The focus on profitability is understandable as part of the Tata Group, where financial performance influences operational freedom. Additionally, Tata 1mg’s cost control measures reflect a broader industry trend. It is becoming less viable to acquire customers at high costs when customer loyalty is uncertain. This has led many e-commerce players to favor data-driven, targeted campaigns over indiscriminate discounting. However, with the large Tata Neu platform in play, Tata 1mg is expected to have more leeway in its operations.