Zomato To Infuse INR 300 Cr In Blinkit Amid Mounting Competition

SUMMARY

As per RoC filings, Zomato will also invest an additional INR 100 Cr in its ticketing arm Zomato Entertainment

Zomato has so far invested INR 2,300 Cr in Blinkit since its acquisition of the quick commerce player in August 2022

Last month, Zomato said Blinkit turned adjusted EBITDA positive in the month of March 2024, with operating revenue doubling YoY to INR 769 Cr in Q4 FY24

Amid rising competition in the quick commerce segment, foodtech juggernaut Zomato plans to invest INR 300 Cr in its quick commerce arm Blinkit.

As per Registrar of Companies (RoC) filings accessed by Economic Times, the listed company will also invest an additional INR 100 Cr in its ticketing arm Zomato Entertainment.

The regulatory filings noted that Zomato has invested INR 2,300 Cr in Blinkit since the latter’s acquisition in August 2022.

The capital infusion comes as ecommerce giant Flipkart and JioMart are set to foray into the quick commerce space. Besides, incumbents such as Swiggy Instamart and Zepto are also aggressively scaling up their operations and offerings to compete better with Blinkit.

While there is no clarity on how Blinkit plans to utilise the funds, Zomato, in its quarterly earnings report in May, said that the quick commerce vertical will increase its dark store count to 1,000 by the end of March 2025 as against 562 at the end of March 2024.

Additionally, Blinkit has been on an expansion spree and has been diversifying its product categories. This has pitted it directly against horizontal ecommerce players in segments such as apparel, consumer electronics, among others.

It is pertinent to note that Zomato acquired Blinkit in an all-stock deal in 2022 for about INR 4,477 Cr. Prior to completely taking over Blinkit, Zomato owned a 9% stake in the quick commerce major.

The Albinder Dhindsa-led company also raised $100 Mn via convertible notes from Zomato in March 2022. In the same month, the foodtech major also extended a loan of $150 Mn to Blinkit, before fully acquiring it.

The latest development comes at a time when Blinkit has emerged as the crown jewel of Zomato. The quick commerce platform clocked revenue of INR 769 Cr in the fourth quarter (Q4) of fiscal year 2023-24 (FY24) as against INR 363 Cr in the year-ago period.

Blinkit also turned adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) positive in the month of March 2024. The platform’s adjusted EBITDA loss declined to INR 37 Cr in Q4 FY24 as against INR 203 Cr in the year ago period.

And even brokerages are bullish about Blinkit’s future. For instance, Goldman Sachs, in April, said that the quick commerce platform was driving larger shareholder value than its core food delivery business.

The brokerage also noted that Blinkit’s implied value stood at INR 119 per share as against INR 98 apiece for Zomato’s food delivery business. This, as per Goldman Sachs, translates into a $13 Bn contribution by Blinkit to Zomato’s value.

On the other hand, brokerage firm Macquarie last month underlined increased competitive pressure on Zomato in the quick commerce sector and said it sees a downside to both consensus forecast and margins for Blinkit.

Meanwhile, in another trouble, the Telangana food safety department raided a warehouse of the Zomato-owned company in the state’s Medchal Malkajgiri district last week and found the premises to be “disorganised, unhygienic and dusty”.

The authorities said a notice would be issued to the company and further action will be accordingly taken against the quick commerce major.

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