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According to a recent Goldman Sachs report, Blinkit, the rapid commerce startup bought by Zomato in 2022, has outperformed Zomato's main meal delivery business. This transition is a critical milestone in both firms' journeys and reflects the changing face of the Indian startup ecosystem.
Goldman Sachs analysts, in a note, highlighted that Blinkit's implied valuation within Zomato’s sum of the parts (SOTP) has soared to approximately $13 billion. This valuation surge is a stark contrast to Blinkit's troubled status when it was acquired for $568 million amidst financial distress, previously known as Grofers.
The acquisition of Blinkit has proven to be a strategic masterstroke for Zomato, with the startup's performance witnessing a remarkable upswing post-acquisition. Originally acquired at a valuation downturn, Blinkit has not only regained its footing but has surged ahead to become a key player in the quick commerce segment.
The driving force behind Blinkit's meteoric rise lies in its impressive financial performance and market expansion endeavors. Goldman Sachs attributes the surge in Blinkit’s valuation to improved gross order value (GOV) estimates, which have surged by approximately 50% compared to the previous year. Furthermore, there is immense potential for Blinkit's expansion, with projections suggesting the platform could expand its operations to encompass 40-50 cities, tapping into a sizable grocery and non-grocery market estimated at $150 billion as of CY23.
Looking ahead, Goldman Sachs paints a promising picture for Blinkit, forecasting a robust 53% compound annual growth rate (CAGR) in GOV from 2024 to 2027. This growth trajectory is expected to significantly bolster Zomato's overall revenue, with a projected 32% adjusted revenue CAGR.
The note also underscores the transformative impact of Blinkit on the Indian e-commerce landscape, envisioning the quick commerce segment capturing around 70% share of India’s online grocery market within the next 2-3 years. This optimistic outlook is underpinned by a favorable balance between pricing and delivery times, positioning Blinkit as a formidable player in the online retail arena.
For Zomato, Blinkit's ascension to the forefront of the company's valuation hierarchy reinforces its market positioning and augments its food delivery segment. Deepinder Goyal, founder and CEO of Zomato, has previously hinted at Blinkit surpassing the core food delivery business in both scale and profitability, a vision that now appears increasingly attainable.
In conclusion, Blinkit's remarkable journey from a troubled entity to a valuation powerhouse underscores the resilience and dynamism of the Indian startup ecosystem. As Zomato continues to diversify its offerings and expand its footprint, Blinkit stands as a testament to the transformative potential of strategic acquisitions and the relentless pursuit of innovation in the digital age.
