According to analysts at Goldman Sachs, the value of Blinkit, the quick commerce firm owned by Zomato, has now surpassed that of its core food delivery business. In their note on Thursday night, the analysts stated that Blinkit’s implied valuation in Zomato’s sum of the parts (SOTP) is currently $13 billion, compared to $2 billion in March 2023. This also marks the first time that Blinkit’s per-share value of Rs 119 is higher than that of food delivery, which is at Rs 98. Zomato’s current market capitalization is approximately $20 billion, equivalent to Rs 1.63 trillion.
Zomato’s founder and CEO, Deepinder Goyal, has been hinting for several quarters now that the quick commerce business is expected to overtake the food delivery business.
The Goldman Sachs note mentioned that Zomato’s food delivery earnings before interest, taxes, depreciation, and amortization (EBITDA) margin is already the highest among global food delivery platforms, and a similar trend is expected for quick commerce. The investment bank also predicts that Blinkit’s gross order value (GOV) will grow at a compound annual growth rate (CAGR) of 53% during FY2024-27.
They also stated that Blinkit’s GOV growth and margin improvement have consistently exceeded expectations. As a result, they now expect Blinkit’s GOV and EBITDA to surpass that of food delivery by FY29. Blinkit, formerly known as Grofers, was acquired by Zomato in 2022 for $568 million through an all-stock deal. Prior to the acquisition, the company was reportedly valued at $800 million, with its valuation decreasing from $1 billion.
However, since then, Blinkit has made significant improvements in its financial health. It currently has the highest valuation of $13 billion among all players in the segment. For example, Zepto was valued at $1.4 billion after raising $200 million in 2023, while Blinkit is currently in talks to raise $300 million, which would value the company at $2.5-3 billion. The valuation of Swiggy’s Instamart is unknown. According to Goldman Sachs, the Indian quick commerce market is expected to grow due to factors such as a large unorganised grocery sector, high population density in urban areas, and a favourable ratio of delivery costs to average order values.
Currently, quick commerce platforms operate in less than 30 cities, with plans to expand to 40-50 cities in the future. According to their analysis, these cities have a total addressable market (TAM) of approximately $150 billion for quick commerce platforms as of CY23. In the third quarter (Q3) of financial year 2023-24 (FY24), Blinkit’s growth surpassed that of Zomato’s core food delivery business. In Q3, Blinkit’s GOV grew by 103% compared to 27% GOV growth in food delivery. The company has also seen strong growth in ad revenue and profitable expansion of its dark stores.
Higher average selling price (ASP) categories, such as iPhones and PS5s, have also contributed to the steady increase in Blinkit’s average order value (AOV) per transaction, which in turn improves the margin of each order. In Q3, Blinkit’s AOV was Rs 635, compared to Rs 607 in the previous quarter. Their GOV also increased by 28% sequentially, driven by the increase in AOV, according to regulatory filings. The total number of orders in the December quarter increased to 55.8 million from 45.5 million in the previous quarter, while monthly transacting users also increased from 4.7 million to 5.4 million quarter-on-quarter (QoQ).
