Zomato: It’s time for investors to open their eyes to Blinkit
Blinkit turned adjusted-Ebitda-positive for the first-time in March. Zomato arrives at adjusted Ebitda by adding employee stock option (Esop) expenses and subtracting lease rentals. Note that in the fourth quarter of FY24, Blinkit posted an Ebitda loss even as quick-commerce gross order value (GOV) continued to grow, rising 14% sequentially.
It turned adjusted-Ebitda-positive in March as the average delivery fee per order was about ₹20, showing consumers were willing to pay more for prompt delivery. As such, the revenue from delivery fees alone could be in the region of ₹44 crore a month if one assumes the 66 million orders in Q4 were spread evenly across the three months. The only concern is the sequential drop in average order value (AOV) to ₹617 in Q4 from ₹635 in Q3.
Normally, a larger AOV leads to higher profitability as the delivery cost broadly remains the same. Nevertheless, in view of Blinkit’s improving financials, Zomato’s management has chalked out ambitious plans to increase the number of stores in its delivery network from 526 at the end of FY24 to 1,000 stores by the end of FY25. This could boost revenue in FY25, but expansion costs could hurt profitability.
Eventually, Zomato expects Blinkit to have a steady Ebitda margin of 4-5%. Last year, the GOV jumped to ₹12,500 crore from ₹6500 crore in FY23. Given that the bulk of store additions have just been rolled out and further expansion is underway, GOV could touch ₹40,000 crore and Ebitda ₹2,000 crore by FY26.
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