Goldman Sachs says Zomato’s quick commerce unit Blinkit surpasses core food business in value

Goldman Sachs Report: Zomato’s Blinkit Valued Higher Than Core Food Delivery Business

In a surprising turn of events, Goldman Sachs has reported that Zomato’s quick commerce arm, Blinkit, is now more valuable than its core food delivery business. According to the investment bank’s sum-of-the-parts analysis, Blinkit’s implied value is estimated at 119 Indian rupees per share ($1.43), totaling about $13 billion, while Zomato’s food delivery business is valued at Rs 98 per share.

The surge in Blinkit’s valuation is attributed to its strong growth potential in India’s fast-growing quick commerce market. Goldman Sachs forecasts Blinkit’s gross order value to grow at a compound annual growth rate of 53% between 2024 and 2027, outpacing the overall online grocery market’s projected CAGR of 38% during the same period.

India’s quick commerce market is seen as a promising sector for growth due to factors such as a large unorganized grocery sector, high population density in urban areas, and favorable delivery costs. Blinkit’s ability to offer competitive prices and fast delivery times has driven customer adoption and contributed to its valuation surge.

The report also highlights India’s unique position in the global quick commerce landscape, with analysts noting that the country is poised to leap directly from unorganized retail to quick commerce, bypassing the modern retail phase seen in other countries. With the potential for up to five profitable players in the market by 2030, competition is heating up among players like Swiggy and Zepto.

The implications of Blinkit’s valuation surge are expected to impact competitors like Swiggy, which is gearing up for an IPO to raise $1.25 billion, and Zepto, which is aggressively competing for a share of the Indian quick commerce market. With Blinkit projected to achieve EBITDA breakeven by mid-2024 and generate higher margins than Zomato’s food delivery business by 2030, the battle for dominance in India’s quick commerce sector is only just beginning.