India’s new-age internet companies may be sitting on a profit engine that investors are still not fully pricing in: advertising.
With India’s digital advertising market already at around Rs 80,000 crore and commerce-led platforms accounting for roughly Rs 20,000 crore of that spend, Karan Taurani, Executive Vice President at Elara Capital, sees retail advertising emerging as one of the biggest drivers of earnings for businesses ranging from Blinkit and Nykaa to Meesho. He estimates that advertising could account for 60-80% of EBITDA for several platform businesses, while much of the incremental profit growth over the next few years could also come from this high-margin revenue stream.
