Zepto’s expenses surge over 71 pc in FY24, losses at Rs 1,248 crore
Blinkit’s rival Zepto saw its expenses surge a whopping 71.6 per cent to Rs 5,747 crore in the last financial year (FY24), as the company clocked Rs 1,248.6 crore in losses.
Global analyst Goldman Sachs in a note has said that the implied value of Blinkit is now larger than that of Zomato’s core business, that is, food delivery.
In 2022, Zomato had acquired Blinkit for $568 million but since then, on the back of improved performance, the latter’s implied valuation has grown to a staggering $13 billion, according to analysts at Goldman Sachs.
Further, on a year-on-year (YoY) basis, the valuation has grown by over 6X. Back in 2022, when Zomato announced its decision to acquire Blinkit, formerly Grofers, investors saw it as a rescue act and Zomato’s shares dropped 20 percent in response.
The company, however, continued to be optimistic and it now appears to have delivered on its promises.
“We note that Blinkit’s implied valuation in our Zomato’s sum of the parts (SOTP) is (close to) $13 billion now, versus $2 billion in March 2023, with per share implied value of Rs 119 higher than food delivery, at Rs 98, for the first time,” Goldman Sachs said in a note.
The $13 billion valuation for Blinkit is an upgrade from Goldman Sachs’ earlier estimate of $8 billion (as per an April 4 report).
The upgrades were because of higher gross order value (GOV) estimates for Blinkit which is tracking around 50 per cent higher than estimates from one year ago, it added.
Further, the note said the upward trend for GOV will continue supported by economics and industry structure for quick commerce which is improving based on new analysis of the potential total addressable market (TAM).
Quick commerce platforms are currently operational in less than 30 cities, but have the potential to expand to 40-50 cities over time.
“As per our analysis, these cities represent about $150 billion in grocery and non-grocery TAM for quick commerce platforms as of CY23t,” Goldman Sachs said.
Goldman Sachs estimated that the online grocery industry is around $11 billion as of FY24, and quick commerce companies make up for around 50 per cent of the market, or a $5 billion opportunity in GOV.
“We believe the quick commerce segment can continue taking share from slotted delivery, and reach (around) 70 percent share of India’s online grocery in 2-3 years, a combination of good balance between pricing and delivery times,” it said.
It is to be noted that for Zomato, which currently has a market capitalization of around $20 billion, Blinkit is the largest segment and accounts for $13 billion of the total market capitalization.
Advertisement
Advertisement
