During FY22 and FY23, Tata 1mg focused on rapid growth, achieving more than a two-fold increase in collections in each fiscal year. However, the company shifted its focus to profitability in the fiscal year ending March 2024. This strategic change resulted in a revenue growth of 21% while simultaneously reducing losses by 75% in FY24.
Tata 1mg’s revenue from operations rose to Rs 1,968 crore in FY24, up from Rs 1,627 crore in FY23, according to consolidated financial statements from the Registrar of Companies (RoC). A significant portion of this revenue, 81.3%, came from the sale of medicines, which saw a 24% increase to Rs 1,599 crore in FY24. Other revenue streams included lab test fees, patient support programs, advertising, and shipping services.
In addition to its operational revenue, Tata 1mg earned Rs 23 crore from interest, financial asset gains, and other miscellaneous sources, bringing its total income to Rs 1,991 crore in FY24. Operating with inventory, the cost of procuring medicines was a major expenditure, accounting for 56% of the overall costs and increasing by 8.5% to Rs 1,289 crore in FY24.
Expenses for employee benefits, information technology, legal services, advertising, commissions, packaging, fulfillment, and other overheads contributed to a total cost increase of 20.4%, reaching Rs 2,303 crore in FY24. Despite these expenditures, Tata 1mg’s controlled costs and stable scale enabled the company to cut its losses by 75%, reducing them to Rs 313 crore in FY24 from Rs 1,255 crore in FY23. The company’s EBITDA margin was -10.85%, and it spent Rs 1.17 to earn a rupee in the previous fiscal year.
A major factor in the substantial losses during FY23 was the FVTPL cost, a non-cash expense amounting to Rs 668 crore. Since Tata Digital acquired a 55% stake in 1mg in June 2021, its stake has increased to 63.5%, with the e-medicine platform valued at 1.25 billion. According to estimates, Tata 1mg’s enterprise value to revenue multiple stands at 4.87X. The focus on cost control and financial performance is crucial for Tata 1mg, especially under the Tata Group’s umbrella, where financial success equates to operational freedom.
