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Blinkit delivers for Zomato as orders double

Food delivery firm looks to double down on its quick commerce wing this quarter by aggressively expanding Blinkit stores

Blinkit delivers for Zomato as orders double
[Source photo: Chetan Jha/Press Insider]

Strong growth in the food delivery, quick commerce and the restaurant-booking segments helped Zomato Ltd post robust earnings in the March quarter.

Zomato’s quick-commerce vertical (Blinkit) has become a bigger driver of shareholder value than its core food delivery business in less than two years since the former’s acquisition. Zomato had acquired Blinkit (formerly Grofers) in August 2022 in a ₹4,447-crore (about $530 million today) deal.

Year-on-year, while the gross order value in the food delivery business grew 28% in the past quarter to ₹8,439 crore ($1.01 billion) , that of Zomato’s quick-commerce vertical almost doubled to ₹4,027 crore ($482 million).

Gross orders from its restaurant-booking vertical almost trebled year-on-year to ₹1,069 crore ($128 million), while the business-to-business arm (Hyperpure), which supplies to wholesale entities such as restaurants, posted earnings of ₹13,536 crore ($1.6 billion).

Reporting the company’s first full-year profit for fiscal 2024 on Monday, the food delivery firm said it will double down on its quick commerce business by aggressively expanding stores.

“One of the key vectors for growth for us right now is store expansion. In Q4FY24, we added 75 net new stores, taking our total store count to 526,” Blinkit chief executive officer Albinder Dhindsa said during the earnings call.

“In the current quarter (April-to-June), we expect to add another 100 stores. At this point, we are aiming to get to 1,000 stores by the end of FY25,” he said.

Of the new stores that were opened in the March quarter, 80% were in the top eight cities, with Delhi NCR hosting 178 stores that generated a gross order value of ₹1,748 crore during the quarter

Today, while it is present across 26 cities, the focus from an expansion standpoint is the top eight cities, Dhindsa said.

Giving a lowdown of the vertical’s operating metrics, Dhindsa said the average delivery time in March was 12.5 minutes, with three-fourths of all orders being delivered two minutes ahead of the promised time.

“This meant our service was fast, reliable and stood up to the promise. High quality of service results in higher customer willingness to pay us a delivery fee, thereby leading to better economics. Almost 100% of our orders in March had a non-zero delivery fee, with an average delivery fee per order of ₹20 (not including orders from new customers where we offer a one-time free delivery),” he added.

Elaborating on the rationale for acquiring Blinkit during the earnings call, Zomato chief executive officer Deepinder Goyal said: “Even when we acquired Blinkit, we outlined that one of the key reasons to acquire the business was to defend the food delivery business, because a well-entrenched quick commerce player could pose an easy threat to the food delivery business in the long term.”

Meanwhile, shares of Zomato declined up to 6% in intraday trading on Tuesday as the company said its costs on account of its employee stock ownership plan (Esops) are projected to increase this fiscal.

The food delivery firm sought investor nod for an Esop of 182 million shares of the company that are cumulatively worth about ₹3,500 crore ($419 million) at current market value.

“The total Esop charge for Q4FY24 was ₹161 crore as compared to ₹122 crore for Q3FY24. We expect the Esop charge to increase further in FY25 on account of grant of sops to the Blinkit leadership team and senior employees,” Zomato chief financial officer Akshant Goyal said.

Esop charge is a non-cash expense and is booked only when the ESOPs are granted to employees.

On Monday, the online food aggregator posted a net profit of ₹175 crore in the January-March quarter against a net loss of ₹188 crore in the year-ago quarter. Quarterly revenues jumped 73% from last year to ₹3,562 crore.

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