Citykart, a name synonymous with affordable and stylish fashion in India’s heartland, has just announced a significant funding round, raising a substantial ₹538 crore. This fresh infusion of capital, led by prominent investors TPG NewQuest and A91 Partners, marks a pivotal moment for the Gurgaon-based value fashion retailer, pushing its valuation close to ₹1,400 crore. This development not only underscores the immense potential within India’s tier-II and tier-III towns but also highlights the growing investor confidence in businesses catering to “Bharat.”
Fueling Ambitious Expansion Plans
The newly secured capital is a strategic blend of ₹120 crore in primary capital and ₹418 crore in secondary transactions. This substantial war chest is earmarked for aggressive expansion. Citykart, which currently operates 137 stores, plans to add 40-50 new outlets annually, venturing into previously underserved states like Rajasthan, Jharkhand, Odisha, and Assam. The goal is to replicate the remarkable success achieved in its core markets of Uttar Pradesh and Bihar, bringing organized value retail closer to millions of new customers.
Sudhanshu Agarwal, Founder and Managing Director of Citykart, emphasized the company’s commitment to profitable scaling. Beyond geographical expansion, Citykart is also exploring new store formats in peri-urban regions of Delhi and Gurugram, signaling a strategic move to optimize its retail footprint and reach diverse customer segments.
A Profitable Exit and Strong Investor Confidence
This funding round also saw a significant development with Bahrain-based Investcorp making a full exit, reportedly generating an impressive fourfold return on its six-year-old investment. India SME Investments, another early backer, has also sold half its stake. These exits, particularly Investcorp’s profitable departure, serve as a testament to Citykart’s strong performance and attractive growth trajectory. TPG NewQuest has now emerged as the largest institutional investor, followed by A91 Partners and India SME, solidifying a robust investor base for Citykart’s future endeavors.
Stellar Growth and Future Outlook
Citykart’s financial performance has been nothing short of impressive. The company’s topline has surged by 70% over the past two years, with projections to cross ₹1,300 crore in revenue in FY26, up from over ₹900 crore in FY25. What’s more, Citykart has maintained profitability for five consecutive years, a remarkable feat in the often-challenging retail landscape.
Despite this robust growth and profitability, Citykart’s current valuation multiple of 1.5 times its FY25 revenue remains modest compared to some of its listed peers like VMart (2x revenue) and Vishal Mega Mart (5.4x revenue). However, Agarwal believes that a future IPO could unlock higher valuations, though immediate plans to go public are off the table. The focus remains on doubling down on revenue growth and profitability before considering an IPO.
The “Store-First” Strategy for Bharat
Citykart’s success is deeply rooted in its “store-first” strategy, specifically tailored for the “Bharat” consumer. The company focuses on in-house brands such as Athiya, Nimes, Fumee, and Remise, ensuring affordable yet trendy fashion options. Agarwal highlights a crucial economic dynamic: a 10% increase in income levels in small-town India translates to a 50% rise in disposable income. This significant shift fuels the rapid displacement of the unorganized sector by organized value retail.
As Bharati Agarwal of TPG NewQuest aptly stated, Citykart has demonstrated “an exceptional ability to scale profitably in one of the most challenging and underserved segments of Indian retail.” This substantial private equity infusion marks one of the largest in India’s value retail space, affirming the growing interest of firms in domestic consumption stories beyond the major metros. With this fresh capital and a clear vision, Citykart is well-positioned to continue its journey of democratizing fashion across India.
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