The curious case of companies which command high valuations with low revenues

• The Burgundy Private Hurun India 2022 list includes 61 companies with sales of less than ₹1,000 crore in FY22.
  
• The company with the highest disparity between its value and revenue is GlobalBees, a startup that helps brands scale and sell their products across marketplaces.
  
• The list also includes unicorns like CRED, Spinny, as well as two Adani Group companies.

While most of the valuable companies according to the Burgundy Private Hurun India list generate thousands of crores in revenue, commanding a valuation in the range of 2-10x of their FY22 revenue, there are some companies like GlobalBees which command a 253x multiple valuation to their revenues.

According to the Hurun list, the top ten companies with the highest disparity in their valuation and revenue included two Adani Group companies, apart from unicorns like CRED, Spinny, and others.

“Curiously, some of the most valuable companies in India had surprisingly low sales. 61 of the 2022 Burgundy Private Hurun India 500 companies had sales of less than ₹1,000 crore in FY 2022. Adani Total Gas, for example, had revenues of ‘only’ ₹3,248 crore and only 570 employees, yet had a market cap of ₹3,96,245 crore, whilst unicorn Physics Wallah had a value of ₹9,100 crore, despite generating less than ₹233 crore of sales in FY 2022,” said Anas Rahman Junaid, MD and Chief Researcher, Hurun India.

For instance, GlobalBees, the company with the highest disparity in its value and revenue, is a startup that focuses on nurturing brands and helping them improve their sales. Another one in the list is Bajaj Holdings is an investment company of the Bajaj Group that identifies new investment opportunities.

“Value is perhaps the best way to measure a company’s performance, since value takes into account not just the current performance of a company but also its future potential. If a business is valued at $30 billion, for example, it means that investors believe it is going to deliver profits of $30 billion within ten years,” Junaid added.

Another company with a big difference in value and revenue is CRED, a fintech company that runs a reward based credit card payment app. New age startup, Spinny, which provides an online platform for used car buyers, is also on the list.

Rank	Company	Value to Revenue ratio	Value (₹ cr)	Revenue (₹ cr)
1	GlobalBees	253	9,100	36
2	Bajaj Holdings	152	74,128	487
3	Apna	138	9,100	66
4	CRED	137	53,800	393
5	IDFC	126	12,364	98
6	Adani Total Gas	122	3,96,245	3,248
7	Spinny	81	14,500	180
8	Turtlemint	76	7,500	99
9	Groww	67	24,800	369
10	Adani Green Energy	60	3,33,106	5,548
11	Physics Wallah*	39	9,100	233

Source: Hurun Research Institute, 2022 Burgundy Private Hurun India 500, BSE

The patient capital

While two Adani Group companies feature in the list of top ten companies with the highest disparity between their value and revenue, the group is focused on raising fresh funds.

Earlier in November, the group’s flagship company, Adani Enterprises, announced plans to raise ₹20,000 crore via a further public offering (FPO).

“We have done strategic capital. The next capital is patient capital. Indian mom and pop investors invest for their children and grandchildren,” the company’s chief financial officer, Jugeshinder Singh said in a $4 interview.

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