Blinkit Best Placed To Make Most Of Quick Commerce Boom: CLSA

SUMMARY

CLSA expects Blinkit, Zepto and Swiggy Instamart to reach a cumulative gross order value of $10 Bn by FY26

The brokerage said Zomato will be the largest listed beneficiary in the quick commerce space, adding it expects Blinkit’s EBITDA and net profit to turn positive by FY25

CLSA, which has an outperform rating on Zomato, raised the PT for the company to INR 353 from INR 350 to reflect its Paytm ticketing acquisition

Brokerage CLSA expects the gross order value of major quick commerce players like Blinkit, Zepto and Swiggy Instamart to reach $10 Bn by the financial year 2025-26 (FY26).

“We expect Zomato’s Blinkit, Zepto and Swiggy Instamart – the top three (quick commerce) players – to reach $10 Bn in gross order value by FY26 and surpass $78 Bn within a decade,” CLSA said in a recent note.

The brokerage added that Zomato-owned Blinkit stands to benefit the most from this quick commerce boom. It expects Blinkit’s EBITDA and net profit to turn positive by FY25.

Saying that Zomato will be the largest listed beneficiary in the quick commerce space, CLSA flagged that FMCG giants Marico and Hindustan Unilever face substantial risks as their distribution advantage erodes.

The brokerage raised the price target (PT) for Zomato to INR 353 from INR 350 to reflect its Paytm ticketing acquisition. It continues to have an outperform rating on the Deepinder Goyal-led company.

Following this, shares of Zomato jumped nearly 3.5% to INR 252.90 on the BSE during the intraday trading on Tuesday (September 3). However, the stock gave up some of the gains to end 1.4% higher at INR 247.75.

The analysts at CLSA said that Blinkit, Zepto and Instamart are the top three players and hold more than 90% of market share by revenue, with smaller contributions from Big Basket’s BBNow and Flipkart.

On Zepto, they said it is an “up-and-comer with much to offer its customers”.

The note comes at a time when Zomato continues to see its profit rise quarter after quarter. In Q1 FY25, its net profit jumped to INR 253 Cr from INR 2 Cr in the year-ago quarter, as Blinkit continued to show improvement in its financial performance. Gross order value of Blinkit rose 130% to INR 4,923 Cr during the quarter under review, from INR 2,140 Cr, a year ago.

Meanwhile, Dutch investment firm Prosus said in its 2024 annual report that IPO-bound Swiggy’s quick commerce business Instamart clocked a higher GOV than that of the ecommerce industry, fueled by geographical penetration and stock-keeping unit expansion, in June.

Additionally, Zepto has raised over $1 Bn in a span of about three months, thereby heating up the competition in India’s burgeoning quick commerce space.

Amid all these, Flipkart recently launched its quick commerce service Flipkart Minutes, while Amazon is also looking to enter the segment in the first quarter of the next year.