Zomato's quick commerce unit Blinkit eclipses core food business in value, says Goldman Sachs | TechCrunch

Zomato's quick commerce unit Blinkit eclipses core food business in value, says Goldman Sachs | TechCrunch

Indian food delivery giant Zomato's instant commerce arm Blinkit is now worth more than its core food delivery business, Goldman Sachs said in a report late on Thursday, according to the bank's comprehensive analysis of parts.

The investment bank estimates Blinkit's valuation at 119 Indian rupees per share ($1.43), or about $13 billion, while Zomato's food delivery business is valued at 98 rupees per share. Goldman previously valued Blanket at $2 billion in March 2023.

Blinkit's valuation has been boosted by its strong growth potential in India's fast-growing instant commerce market. Goldman Sachs forecasts Blanket's gross order value (GOV) to grow at a compound annual growth rate (CAGR) of 53% between fiscal 2024 and 2027, the same as the overall online grocery market over the same period. will surpass the expected CAGR of 38%.

Zomato Acquired Blinkit for less than $600 million. In 2022

The investment bank believes that India's quick commerce market is poised for growth due to several factors, including a large unorganized grocery sector, population density in urban areas, and a favorable ratio of delivery costs to average order prices. . These dynamics have allowed Blinkit to offer competitive pricing and fast delivery times, which has helped drive consumer adoption.

Spot trading, which was booming globally during the pandemic, has since cooled in many markets. However, India continues this trend. Unique factors such as a large unorganized retail sector and favorable demographics, coupled with attractive unit economics, Separation of IndiaAccording to many analysts.

HSBC analysts wrote in a note this month that India is poised to make the jump from unorganized retail directly to instant commerce, possibly bypassing the modern retail phase seen in other countries where instant commerce's success is traditional. It lies in its ability to replicate the characteristics of karnas (neighborhood stores), such as catering to small, frequent purchases and offering a wide range of SKUs. With Indian kitchens requiring regular top-ups and limited storage space, the proximity of quick commerce and growing product ranges make it an attractive alternative to both kiranas and modern retail.

Goldman Sachs estimates that India's addressable instant commerce market in just 50 cities is $150 billion by 2023. Despite the presence of well-capitalized competitors like Swiggy and Zepto, the bank believes the market is big enough to accommodate up to five. Profitable player by FY 2030.

Blinkit is expected to achieve EBITDA breakeven by the June quarter of 2024 and generate higher EBITDA margins than Zomato's food delivery business by FY 2030, the report says.

Blanket's price hike is likely to impact Zepto and Swiggy, which plans to make its public debut this year.

Swiggy, which runs instant commerce platform Instagram, revealed this week that it had received approval from its shareholders for an IPO, where it It is expected to raise about $1.25 billion.. Swiggy was valued at $10.7 billion in its most recent private financing round in early 2022.

Zepto, which is backed by StepStone Group and Y Combinator Continuity, is also competing fiercely with the two firms for a piece of the Indian instant commerce market. The Mumbai-headquartered startup has been on a roll lately. Achieve $1.2 billion in annual sales..

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