Blinkit Surpasses Zomato's Food Delivery Business in Value: Goldman Sachs

In a surprising turn of events, Blinkit, the quick commerce startup acquired by Zomato in 2022, is now deemed more valuable than Zomato's core food delivery business, according to a recent report by Goldman Sachs.

Blinkit's Valuation Soars

• A Goldman Sachs analyst note published on April 25th revealed Blinkit's implied valuation reaching a staggering $13 billion, translating to Rs 119 per share.

• This valuation surpasses Zomato's food delivery business, currently valued at Rs 98 per share.

Blinkit's Strong Performance Drives Revaluation

• This significant upward revision for Blinkit comes just weeks after Goldman Sachs' earlier estimate of $8 billion.

• The analysts attribute this impressive growth to Blinkit's higher gross order value (GOV), exceeding initial projections by a remarkable 50%.

Zomato Acquisition Pays Off

• Zomato acquired Blinkit for $568 million in 2022. Since then, Blinkit's implied valuation has skyrocketed to $13 billion, reflecting its improved performance. This translates to a more than 6-fold increase in valuation year-over-year (YoY).

Analyst Insights and Future Projections

• Goldman Sachs' report highlights Blinkit's strong potential, projecting a compound annual growth rate (CAGR) of 53% for its GOV between 2024 and 2027.

• This growth, combined with Zomato's existing food delivery business, is expected to drive a consolidated adjusted revenue CAGR of 32% for Zomato.

• Goldman Sachs emphasizes that Zomato's projected revenue CAGR surpasses all other companies within their food delivery and India internet coverage.

Profitability Potential and Investment Outlook

• The report suggests further potential for Zomato's valuation to increase as profitability improves, particularly within the burgeoning quick commerce sector.

• Goldman Sachs highlights Zomato's current advantage, boasting the highest EBITDA margin among global food delivery platforms. They anticipate a similar trend in the quick commerce space, with margins potentially exceeding those of food delivery.

Analyst Recommendation and Market Response

• Goldman Sachs maintains a "buy" recommendation for Zomato's stock, raising their price target from Rs 170 to Rs 240. This bullish outlook aligns with the broader analyst sentiment, with 24 out of 28 analysts recommending "buy" and the remaining holding a "hold" rating.

• The report emphasizes that the market might be underestimating Zomato's potential for growth and profitability in the online grocery segment.

• As of April 26th, 12 pm IST, Zomato's shares reacted positively to the news, witnessing a 2% rise to Rs 185.55.

Conclusion:

The news of Blinkit's valuation surpassing Zomato's food delivery business underscores the rapid evolution of the quick commerce sector in India. With Blinkit's exponential growth trajectory and Zomato's strategic positioning in the online grocery segment, both companies are poised for continued success in the evolving digital landscape.