They might expand into other categories, becoming like Amazon and Flipkart, …
Become like Amazon and Flipkart? It looks like the other way round. Its Amazon and Flipkart that want to become Blinkit, venture into Q-commerce. I am not sure if Blinkit is yet interested in becoming Amazon like e-commerce retailer. They reman focussed on
quick delivery model
Target cutsomer base is rich/upper middle class who won;t bother about paying a little extra for convenience, luxury, for unplanned things.
Flipkart’s sales are ₹56,000 crore, yet they burn ₹4,800 crore. Amazon India generates ₹25,000 crore in sales but also loses money.
That’s another difference wrt Zomato. Zomato execution has ensured the start of profit cycle last FY.
Just think you are in year 2022…2 years back.
Were you or any analyst able to predict Zomato revenue/profit growth at that time, when it was selling for Rs 40/50.
And here the attempt is being made to predict the revenues and margins and profits after 10 years !
Imagine Blinkit, without warehouses or a pan-India distribution network, magically reaching Flipkart and Amazon’s sales levels in 10 years.
Yeah its not easy. . However think why they are still not able to do quick deliveries even when they have such big networks
I think newer collaborative models will come-in for large products in coming years to build efficiencies with Blinkit/Q-commerce at centre of them.
I doubt Zomato and its subsidiaries can effectively compete against BigBasket, Zepto, Instamart, JioMart, and others.
No doubt there is competition, however any reasons, specifics, data for this bearishness on an outperforming/proven business ?
This will be helpful.
In then end, its different opinions that make a market. Its ok to have different choices.
Absolutely! When Prof. Damodaran valued Zomato at ₹41 during its IPO in 2021, he looked at the information available back then. he didn’t consider blinkit at that time as Zomato acquired Blinkit only in June 2022.
There are so many things we miss when valuing a company. it is nearly impossible for anyone to predict it correctly
I can’t say more than I have. I won’t say that Zomato is not a good business. But the valuation is absurd.
I sincerely hope you can 10x your money in this and it becomes your ‘multibagger’.
Personally I can’t believe that Zomato’s execution is better than that of their multiple competitors. For me it is a commoditised business.
Their market cap is far larger than their total addressable market.
Look at other stocks related to quick commerce and multiple markets across the Globe.
I see downside up to 95%.
I will repeat rule number one of investing is to never lose money and the rule number two is to never forget rule number one.
I think most people are assuming that Blinkit is competing with Zepto, BB for the same pie. Its not. The competition is with Kirana stores and its taking away that business. And the TAM of that is massive. Where they have done wonders is AOV of Rs 620 vs Rs 450 of the competitors which goes straight to the bottomline. Agree that in India there is low brand loyalty, but the expansion of the market especially newer cities and new premium product categories is what make it possible for multiple players to succeed. In future the demanding Indian customers will want everything in 10 mins.
Disclosure - Took significant position between 40 and 100. No added since then since despite the massive growth as valuations are not attractive any longer.
Can goverment bring some policy changes in Quick commerce which can hamper the business of Zomato? Also lot of employment depends on quick commerce. So goverment may not want to kill this growing space . Requesting members to share your thoughts .
With such a massive data base and last mile delivery in place, what will stop Zomato to venture into adjacencies such as Dhobies, medicines and lot others? They can expand the addressable market where more than one player can survive and prosper.
This space is highly competitive. For example, today I placed an order with Blinkit, but after waiting 20 minutes due to a server issue, I cancelled and switched to Instamart. It highlights how quickly market share can shift in this segment.
I’m holding onto Zomato because I trust the management’s execution and their ability to drive a turnaround. Additionally, I believe their Total Addressable Market (TAM) will keep expanding as more young adults graduate and join the organized workforce, particularly in Tier 1 and Tier 2 cities.
The reality of valuation is you’re right for a very brief moment of time. Then, you are going to be wrong again, if you measure right and wrong based on price being different from value. So, I think Zomato might become one of the companies I will revisit.
Idea is not to look at rear view mirror, which will tell nobody has grown this large so nobody will, but some intelligent looking into future.
As mentioned TAM is huge and if there are no external shocks (govt. regulations, economic crisis).
India’s GDP can be assumed to grow at ~5% (conservatively) + eating the share of kiranas, marts, e-commerce etc. As shared, New Business lines will also contribute some pp.
It is slighlty difficult to see them growing at 15% for 10 years but I can’t rule it out. May be i can say that it will be bull case but with high probability.
I know Zomato is trading at a premium valuation. It’s the only highly valued stock in my portfolio, and one of the reasons I’m bullish on it is because of the management.
I read a recent blog post by Manas in which he talks about how Deepinder is great at figuring out what to do at each stage of the S-curve of a business
I agree completely with your analysis. Most of people don’t understand Blinkit’s high growth is due to opening more dark stores and expansion to newer geographies. The most important metric is SSG (Same store growth), which Zomato, Blinkit don’t share. Also, given this sector has potential to affect millions of Kirana stores, Govt will certainly introduce some regulations. So, at this valuation, one should stay out of this.
Its very easy choice for Govt. Quick Commerce employs thousands of direct employees, whereas Kirana stores provide incomes to millions of house holds. Also large unorganized labour works in Kirana stores or at FMCG distributor level. I don’t think govt’s will bring major policy changes, however, small changes like providing Health Insurance / PF benefits to its delivery partners or no special SKUs for quick commerce has potential to hurt bottomline of quick commerce companies.
The present govt likes to replace unorganised players (kiranas) with organised players. Kiranas run business mostly on cash which is revenue loss for govt.
Zomato does provide Average GOV per day, per store for Blinkit. This metric continues to grow quarter on quarter despite the rapid pace of new store additions. I presume new stores have a much lower GOV per store per day but offset by continued growth in more mature stores.
I am not sure if Blinkit is yet interested in becoming Amazon like e-commerce retailer. They reman focussed on
