Is Cash-on-delivery risk factor for eCommerce?

Experts have started scrutinising the risk factor with issuance of a discussion paper by SEBI over the fund-raising by start-ups- including eCommerce companies.
Is Cash-on-delivery risk factor for eCommerce?

Amid issuance of a discussion paper by SEBI over the fund-raising by start-ups including eCommerce companies- market experts have started scrutinising the risk factor.

"Since lots of eCommerce sales are 'cash-on-delivery', sure this will be targeted, too, one day - welcome to 'risk factors," tweeted Samir Arora, founder of Helios Capital's.Market players say given the ambiguity about valuations, soon there will be more concerns by others.

Leveraged bets to the tune of Rs 18,000 crore by wealthy investors are riding on the initial public offer of transportation company, VRL Logistics.The Rs 460-crore offering has been oversubscribed 250 times in the category meant for high networth individuals (HNIs), which means those who applied for Rs 250 crore of shares will get allotment for only Rs 1 crore.

According to experts, if one factors in the interest component, the break-even cost works out to Rs 70 a share. In other words, for HNIs to profit, shares of VRL have to list at a minimum of 35% premium.

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