Blinkit contributes more to Zomato’s market cap than its food delivery biz: Goldman Sachs

Quick-commerce platform Blinkit’s contribution to parent Zomato’s market value has surpassed that of the mainstay food-delivery business, according to a Goldman Sachs report.

The report estimates Blinkit’s implied value at Rs 119 per share, compared with Rs 98 a share for Zomato’s food-delivery business. This translates to a contribution of $13 billion by Blinkit to Zomato's value, up from $2 billion in March 2023, as per Goldman Sachs. As of Friday, Zomato had a market capitalisation of nearly $20 billion.

On Friday noon, Zomato’s shares were trading at Rs 188.35 on the BSE, 1.9% higher from the previous close.

Zomato had acquired Blinkit in 2022 for around $570 million in an all-stock deal. The quick commerce firm was backed by SoftBank, Tiger Global and Sequoia Capital India (now Peak XV Partners).

Over the last six months, analysts and brokerages have predicted the upside in Zomato’s stock price to come from expansion in the fast-growing quick-commerce segment. Since end-October, the company’s share price has gained by almost 80%.

Goldman Sachs in its report said it also expects Blinkit’s gross order value (GOV) and earnings before interest, taxes, depreciation and amortisation (Ebitda) to be higher than that of food delivery by fiscal 2029.

Meanwhile, it expects Zomato’s food-delivery business to grow at 15-20% on-year in the foreseeable future.

In the October-December quarter of FY24, Zomato’s food-delivery business reported a GOV of Rs 8,486 crore, 27% higher year-on-year. Blinkit’s GOV came in at Rs 3,542 crore, up 103%.

“We note that Blinkit’s growth has been consistently tracking higher vs our expectations, and we have raised our FY25 GOV estimates for Blinkit by around 50% over the last 12 months,” Goldman Sachs said. “Also, Blinkit’s margin profile has been improving faster vs our expectations.”

In March, Zomato chief executive Deepinder Goyal said that Blinkit could become bigger than Zomato (food delivery) in a year.

Competition concerns
Quick-commerce platforms could continue taking share from unorganised retail on the back of “substantial” pricing advantage and higher number of items on offer, the investment bank said.

ET had reported in February that at a time when the quick-commerce segment was witnessing a surge in growth, India's neighbourhood grocery stores — numbering around 12 million — were facing an intensified slowdown in sales.

Goldman Sachs said of the $11 billion online grocery industry in FY24, quick commerce had already made up for nearly 50%.

“Given the size of the industry, we expect competition to be a consistent feature of the online grocery industry, with no player likely having a more than 20% market share,” it said.

In the quick-commerce space, Blinkit’s rivals include Swiggy Instamart, Nexus Venture Partners-backed Zepto and Tata Group-owned BigBasket’s BB Now.

On April 17, ET reported, citing a report by HSBC Global Research, that Blinkit’s market share rose from 32% in March 2022 to 40% in January 2024.

In the same period, Instamart’s market share fell from 52% to 32%, while Zepto’s increased from 15% to 28%.