Risk Radar - Key Risks You Should Know About Jasper Infotech Pvt Ltd IPO

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  • 30 Jan 2024
Risk Radar - Key Risks You Should Know About Jasper Infotech Pvt Ltd IPO

Key Highlights

  • Jasper Infotech Pvt Ltd has a history of financial struggles
  • Its business growth is dependent on how India’s e-commerce industry shapes up
  • It faces liability threat for illegal and counterfeit products on its platform

Jasper Infotech Pvt Ltd, aka Snapdeal, will soon come out with its initial public offering. A leading name in the Indian e-commerce space, investors are eagerly waiting for its IPO. Amid the IPO buzz, it’s essential for you as an investor to be aware of the associated risks with this IPO to ensure the safety of your capital. Read on to learn about some critical risks before investing in this IPO.

  • History of past losses with chances of them in the future

Jasper Infotech Pvt Ltd has a history of financial struggles and has suffered losses in the past. As per the company’s DRHP, it has suffered losses in FY 2019, FY 2020 and FY 2021, amounting to ₹1870.29 million, ₹2735.40 million and ₹1254.40 million, respectively.

These have hurt the company's growth initiatives, and chances of such losses in the future can't be ruled out. Before investing, you must closely monitor the company's financial health to ensure it can effectively meet the challenges of the market and remain afloat.

  • Business growth dependent on the growth of India's e-commerce industry

While Jasper Infotech Pvt Ltd is one of India's leading e-commerce platforms, its fortunes are heavily dependent on the growth of the country's e-commerce industry. Along with external market forces, the firm's ability to constantly adapt and refine its offering as per changing customers' preferences is pivotal in its growth.

Concerns about delayed shipments, exchanging products purchased online, security of online transactions and features of online platforms always pose a risk to its business.

  • Liability threat for unauthorised, illegal and counterfeit products

Jasper Infotech Pvt Ltd faces challenges from unauthorised, illegal, and counterfeit products. With the company expanding operations and market reach, it becomes increasingly susceptible to suppliers and third-party sellers introducing fake products in the supply chain.

This not only poses a threat to the company's reputation but also has legal consequences that could hamper operations and profitability.

  • Failure to maintain required order levels and existing users can impact revenue base

The company's user base is pretty diverse and spans across different age groups and genders. As a result, their needs and preferences vary. If the company fails to maintain the required order level, it can't significantly impact its revenues and jeopardise its finances.

At the same time, note that the company operates in a competitive industry and if it fails to compete well with its rivals, it can negatively impact its business.

Summing it up

While these are some of the key risks associated with investing in Jasper Infotech Pvt Ltd’s IPO, go through the company’s DRHP for a comprehensive overview of the risks. Make sure to understand them fully before investing.

FAQs

Market volatility is one of the foremost risks of an IPO. That said, every company has internal risk factors that you need to be mindful of.

While it has a history of losses in the past, it has registered revenues of ₹388 crore in FY 23.

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