Snapdeal Acquires ESportsbuy Based at Delhi – Will it Give a Fillip to its Business?

Snapdeal is no #1 leader in the online deal segments and may get challenged by entry of Amazon in India  as its entry in India in a full fledged manner can mean that a big fish may eat all small fishes.

To consolidate its position, it has bought eSportsbuy, a Delhi based startup that sells fitness and sports products online at a price of 50-75 Crores. It had earlier bought  Grabbon which changed the methodology of company operations in India and helped it become number 1 in the segment as now Homeshop18 and timesdeal has come in the segment to get a pie of the segment.

Is the Valuation Correct?

It appears that the valuation is on the higher side as correct valuation is maximum upto 5 times of the annual income. However in the business one can not say wrong or right as Thomas Cook Indian venture was sold in 2006 for $70 million and was again bought for $300 million in 2008. See the amount of appreciation. Another example which comes to the mind is of selling of Indian softdrink brands to multinational companies in 90s decade and one can imagine the valuation of the business in present scenario.

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