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Business News/ Companies / News/  Practo plans IPO soon
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Practo plans IPO soon

The proceeds of the initial public offering will be used to fund future growth, the company’s co-founder said

Practo is likely to turn profitable in FY24Premium
Practo is likely to turn profitable in FY24

New Delhi: Tencent-backed healthcare and diagnostics app Practo is looking to go public with its initial public offering (IPO) soon, said co-founder and chief technical officer Abhinav Lal. The company is likely to turn profitable in FY24, he added.

“We should end FY24 with profits. Not a quarter, not a month, but a full-year profit. We should be in the green again after 14 or maybe 12 years. With the focus on profitability, we are 12-18 months away from an IPO."

Lal said the proceeds of the IPO will be used to fund growth, considering that investors are not looking to exit.

“None of them... (investors looking for an exit), thankfully for us. That’s where we have been very selective. To be very honest, a lot of it is going to be about future growth," he added.

In early 2023, the company said it is going to double its revenue to 400 crore in the current fiscal year. While prioritizing positive cash flow, Practo will be achieving the target by the end of the year, Lal said.

“We are on track. I think we should be able to get very close to that number and even achieve it. We are 90%-plus confident that we should hit that number, while the tele-consultation business, standalone is profitable."

In FY22, the company had doubled its operating revenue to 188.9 crore. It stood at 194.53 crore in FY23. Backed by China’s Tencent and venture capital funds Peak XV Partners and Matrix Partners, it is looking to diversify into healthcare delivery and other healthcare services.

According to EY, telemedicine and online delivery of healthcare facilities are helping startups tap a larger market. India’s telemedicine market is expected to be at $5.5 billion by 2025.

Several telemedicine startups are raising capital to expand their customer base, and funding is expected to grow to $21.3 billion by 2025 with a 27% compound annual growth rate from $2.2 billion in FY23 across 131 deals, according to an Inc42 report.

Bengaluru-based Practo was founded in 2008 by Shashank N.D. and Lal, to connect doctors and other health professionals with patients in rural India. The startup, an early entrant in India’s tele-consulting landscape, had 30,000 doctors for online consultation at the peak of the covid pandemic.

The business grew 25 times during the pandemic, with a smaller focus on profitability. “We were in a growth phase then, now the focus is on profitability," he said.

The company’s road to profitability was led by a combination of cost- cutting measures and innovations. Compared with the covid period, it has reduced its staff strength by 25%. “Back then, we were 1,000-1,200 people and had to cut down and make a switch in our strategy, but lot of the hires back then were on a contractual basis."

Currently, it has a 700-800 member team and 75% of tele-consultation is done by an in-house team of doctors.

Increasing the percentage of in-house tele-consultations also helped the firm shore up revenue. “We provide online consultation at a very affordable price, at 300-400 for a session. We are now covering 100% of the country," Lal said.

Practo charges a fixed percentage of the online consultation fees as its commission. However, Lal did not disclose the exact share. The fees for offline consultation varies from location to location and on the speciality of the doctor, for which on an average it charges 250-280 for every sitting.

 

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Published: 30 Oct 2023, 11:08 PM IST
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