Zomato’s quick commerce unit Blinkit eclipses core food business in value, says Goldman Sachs | TechCrunch

Blinkit, the instant commerce arm of Indian food delivery giant Zomato, is now worth more than its core food delivery business, according to the bank’s sum-of-the-parts analysis, Goldman Sachs said in a report late Thursday.

The investment bank estimates Blinkit’s implied value at 119 Indian rupees per share ($1.43), or about $13 billion, while Zomato’s food delivery business is valued at ₹98 per share. Goldman had previously valued Blinkit at $2 billion in March 2023.

Blinkit’s valuation surge is driven by its strong growth potential in India’s fast-growing instant commerce market. Goldman Sachs estimates that Blinkit’s gross order value (GOV) will grow at a compound annual growth rate (CAGR) of 53% between fiscal years 2024 and 2027, compared to an estimated CAGR of 38% for the overall online grocery market during the same period. There will be more.

zomato Acquired Blinkit for less than $600 million In 2022.

The investment bank believes India’s instant commerce market is poised for growth due to several factors, including a large unorganized grocery sector, high population density in urban areas and a favorable ratio of delivery costs to average order values. These dynamics have allowed Blinkit to offer competitive prices and fast delivery times, driving customer adoption.

Instant commerce, which was booming globally during the pandemic, has since cooled off in many markets. However, India is continuing this trend. Has unique factors such as large unorganized retail sector and favorable demographics with attractive unit economics separation of indiaAccording to many analysts.

HSBC analysts wrote in a note this month that India is set to make the leap from unorganized retail to direct instant commerce, potentially bypassing the modern retail phase seen in other countries. The success of Quick Commerce lies in its ability to mimic the characteristics of a traditional kirana (neighborhood store), such as catering to small, recurring purchases and offering a wide range of SKUs. Indian kitchens require regular top-ups and limited storage space, proximity to quick commerce and extended product range make it an attractive option for both grocery and modern retail.

Goldman Sachs estimates India’s instant commerce market to be worth $150 billion by 2023 in the top 50 cities alone. Despite the presence of well-capitalized competitors like Swiggy and Zepto, the bank believes the market is big enough to accommodate up to five profitable players by fiscal 2030.

The report suggests that Blinkit is expected to achieve EBITDA breakeven by the June quarter of 2024 and generate higher EBITDA margins than Zomato’s food delivery business by fiscal 2030.

Blinkit’s valuation surge is likely to have a ripple effect on Zepto and Swiggy, which are planning their public debut this year.

Swiggy, which operates instant commerce platform Instamart, revealed this week that it has received approval from its shareholders for an IPO, where it will Expected to raise around $1.25 billion, Swiggy was valued at $10.7 billion in its most recent private funding round in early 2022.

Zepto, backed by Stepstone Group and Y Combinator Continuity, is also competing closely with both companies for a share of the Indian instant commerce market. The Mumbai-headquartered startup was recently on the move Achieve $1.2 billion in annual sales,