Zomato’s Blinkit Surpasses Core Food Delivery Business in Value
Indian food delivery giant Zomato is experiencing a significant shift in value as its quick commerce arm, Blinkit, has surpassed its core food delivery business, according to a report by Goldman Sachs. The investment bank estimates that Blinkit’s implied value is now $13 billion, compared to the $2 billion valuation in March 2023. This surge in valuation is driven by the strong growth potential of Blinkit in India’s fast-growing quick commerce market.
Goldman Sachs forecasts that Blinkit’s gross order value (GOV) will grow at a compound annual growth rate (CAGR) of 53% between 2024 and 2027, outpacing the projected CAGR of 38% for the overall online grocery market during the same period. The bank believes that India’s quick commerce market is poised for growth due to factors such as a large unorganized grocery sector, high population density in urban areas, and a favorable ratio of delivery costs to average order values. These dynamics enable Blinkit to offer competitive prices and fast delivery times, driving customer adoption.
While quick commerce has cooled in many markets since the pandemic, India continues to defy this trend. Analysts attribute India’s success in the quick commerce space to unique factors such as its large unorganized retail sector, favorable demographics, and attractive unit economics. HSBC analysts even suggest that India may bypass the modern retail phase seen in other countries and leap directly from unorganized retail to quick commerce. Quick commerce replicates the attributes of traditional kiranas (neighborhood stores) by catering to small, frequent purchases and offering a wide range of products. Indian kitchens often require regular top-ups and have limited storage space, making quick commerce an appealing alternative to both kiranas and modern retail.
Goldman Sachs estimates that India’s addressable quick commerce market in the top 50 cities alone is worth $150 billion as of 2023. Despite the presence of well-capitalized competitors like Swiggy and Zepto, the bank believes the market is large enough to accommodate up to five profitable players by 2030.
The report also suggests that Blinkit is expected to achieve EBITDA breakeven by the June quarter of 2024 and generate a higher EBITDA margin than Zomato’s food delivery business by 2030. This shift in valuation for Blinkit may have implications for Zepto and Swiggy, both of which are fiercely competing for a share of the Indian quick commerce market.
Swiggy, which operates the instant commerce platform Instamart, recently received approval from its shareholders for an IPO, where it aims to raise about $1.25 billion. In its most recent private financing round in early 2022, Swiggy was valued at $10.7 billion. Zepto, backed by StepStone Group and Y Combinator Continuity, is also in competition with Swiggy and Blinkit in the Indian quick commerce market. The Mumbai-based startup is on track to achieve $1.2 billion in annual sales.