Foodtech

Zomato to Infuse Rs 300 Crore into Blinkit Amid Intensifying Competition with Swiggy and Zepto

• ByStartupStory     |    June 12, 2024

Gurgaon-based Zomato has announced plans to invest Rs 300 crore in its quick commerce unit, Blinkit, according to a filing with the Registrar of Companies. This move comes as competition in the quick delivery sector heats up, with rivals Swiggy Instamart and Zepto intensifying their efforts.

Zomato’s investment in Blinkit, formerly known as Grofers, marks the latest in a series of financial boosts since its acquisition in August 2022. The all-stock deal was valued at Rs 4,477 crore, and Zomato has since poured Rs 2,300 crore into the quick commerce venture. In addition to the new funds for Blinkit, Zomato will also invest Rs 100 crore in its subsidiary, Zomato Entertainment Pvt Ltd, which focuses on live events and ticketing.

The quick delivery market is becoming increasingly competitive, with Swiggy recently filing draft papers for a Rs 10,414 crore IPO, and Zepto in discussions to raise $300 million (around Rs 2,500 crore). Additionally, e-commerce giant Flipkart has shown interest in entering the space, having recently engaged in talks with Zepto for a potential deal.

In the fiscal year 2024, Blinkit reported revenues of Rs 2,302 crore, a significant increase from Rs 1,064 crore in FY23. The company’s adjusted Ebitda loss has also improved, shrinking to Rs 37 crore in the January-March 2024 quarter from Rs 203 crore a year earlier. Blinkit plans to expand its dark store count to 1,000 from the current 562 as of March 31, and is broadening its product offerings to include apparel, home decor, electronics, sports goods, and home appliances.

The growth of Blinkit has become a major driver of shareholder value for Zomato, even surpassing its food delivery business in market value. A report by Goldman Sachs in April estimated Blinkit’s value at Rs 119 per share, compared to Rs 98 per share for Zomato’s food delivery business. This valuation implies that Blinkit contributes $13 billion to Zomato’s total market value, a significant rise from $2 billion in March 2023.

As of Tuesday morning, Zomato’s market capitalization was over $19 billion (Rs 1.6 lakh crore), with its stock trading 0.4 percent higher at Rs 182.50 on the BSE. Before fully acquiring Blinkit in 2022, Zomato had a 9 percent stake in the company. Blinkit achieved unicorn status in June 2021 after raising $120 million from Zomato and Tiger Global. In March 2022, Blinkit secured $100 million from Zomato through convertible notes, along with a $150 million loan from Zomato in the same month.

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