Zomato - Should you order?

[shyamutty]

ZOMATO: Q3 CONS NET PROFIT 590M RUPEES VS 1.4B (YOY), Cons PAT falls 57% YoY to Rs 59 crore, revenue surges 64%

• Food Delivery GOV growth slowed due to weak consumer sentiment
• Blinkit losses to continue in the near term as Co continues to invest
• Heightened Q comm competition has led to a temporary pause in margin expansion

Q3 KEY INTERNALS

• B2C GOV growth at 57%, 20206 Cr vs
• Food delivery GOV grew 17% YoY; +2% QoQ
• Quick commerce GOV grew 120% YoY; +27% QoQ
• Blinkit EBITDA Loss at 103 Cr vs loss of 89 Cr YoY, 8 Cr QoQ

CO SAYS:

• Will get to 2000 dark stores by Dec 2025 vs earlier guidance of Dec 2026
• 216 Blinkit stores added in Q3 vs 152 in Q2FY25
• Food Delivery EBITDA Margins will reach sustain around 5% in the next few quarters

[Manikandan_Sritharan]

I have personally stopped using zomato and blinkit much because I have both the Amazon Pay ICICI CC (5% discount on amazon) and Swiggy HDFC CC (10% discount on Swiggy)

Zomato needs to do a similar move if they want to stay competitive.

[tarunks9]

But aren’t Amazon India and Swiggy bleeding money?

[Zaki_Ahmad]

Wait for Swiggy’s price action following their quarter’s results, as they will likely be compelled to focus on improving profitability. In doing so, Zomato may gain a competitive edge. Both will are expected to increase platform fees and reduce discounts to enhance their margins.

[vikas_singh]

Q3 2025 Notes:
a. Food Delivery:
i. Sales 2413crs (Y-o-Y growth of 17%, Q-o-Q growth of 3%).
ii. Adj. EBITDA 423crs (y-o-y up 68%, q-o-q up 24%)
iii. GOV 9913crs (y-o-y up 2%, q-o-q up 17%)
iv. Take Rate 24.34% (y-o-y 24.30%, q-o-q 24.15% absolute numbers)
v. Average monthly transacting customer 20.5mn (Y-o-Y growth of 9%, Q-o-Q degrowth of 1%).
o Good: EBITDA has done very well, this has to be mostly attributable to the higher platform handling fees, cost optimization and some bit from reduction of free delivery distance. Company has guided for an Adj. EBITDA margin of >5% in the coming few quarters.
o Bad: Number of active monthly customers have declined for the first time (correct me if I’m wrong). Growth has fallen below the 20% mark, company attributes this to a slowdown in demand, but remains confident of 20%+ growth in coming future.
o 10min delivery model: I felt that the company is doing a pilot with Blinkit Bistro and was very vary of guiding/shedding light on the plans. My personal guess is that they want to be sure of the business model before they commit something. Zomato is trying to solve this by offering <15mins delivery by curating menu items and providing a dedicate fleet. Blinkit Bistro is available in only select locations. Company believes that to be successful in this line of business will not be very easy. They will have to solve for the following:
 Adequate density of delivery partners.
 Dense network of partner restaurants.
 Reduced prep time.
b. Blinkit:
i. Sales 1399crs (Y-o-Y growth of 117%, Q-o-Q growth of 21%).
ii. Adj. EBITDA -103crs (y-o-y down 16%, q-o-q down 11.87x)
iii. GOV 7798crs (y-o-y up 2%, q-o-q up 17%)
iv. Take Rate 17.94% (y-o-y 18.18%, q-o-q 18.85% absolute numbers)
Blinkit

Blinkit
	Q3’24	Q4’24	Q1’2025	Q2’2025	Q3’2025
Sales	644	769	942	1156	1399
EBITDA	-89	-37	-3	-8	-103
GOV	3542	4027	4923	6132	7798
TakeRate	18.18%	19.10%	19.13%	18.85%	17.94%
Avg cust count (in 'mn)	5.4	6.4	7.6	8.9	10.6
Orders (in’ mn)	55.8	65.3	78.8	92.9	110.3
GOV/Day/ Store (in’000)	889	920	956	981	970
Total Stores	451	526	639	791	1007
Store Additions		75	113	152	216
AOV	635	617	625	660	707

o Company has gone very aggressive with opening new stores. Company has almost doubled the store count in last 9months. This has lead to a huge cost on the capex front. Leading to much higher loss on EBITDA front.
o 80% of the new store additions are in the top 8 cities. 20% are in the remaining cities. Of the 80% of the new stores 50% are being opened in high demand location to full up the gaps or ease the load on current stores and drive down the servicing time. 30% are in the unserved locations of the top 8 cities. This 30% store additions will act as seeds for future growth.
o Company has advanced the 2000 dark stores target to December 2025 from earlier guided December 2026. I believe that since the competition intensity is increasing the company is planning to expand its footprint.
o Company mentioned that they have been able to gain market share even in the markets where the competition had a head start. They are not offering discounts on the q-com platform as they believe in investing to improve services.
o GOV per store per day has gone up 9% despite more than doubling of the store count. I find this to be very impressive.
o Higher AOV is attributable to higher share of electronics.
o 52% of GOV is coming from 30% of the stores. Remaining 70% stores contribute 48% of sales. Only 30% of the stores are contribution positive as of Dec’24.
o Company expects the current stores to mature by the end of the current calendar year. They expect the picture tobe clearer by the time they reach 1600-1700 stores by Q2’2025.
o Company expect the contribution margins to be raise above 5% in 2-3years time from the current levels of 3%.
o Increased competition is increasing customer awareness and the CAC to bring in more customers has remained very attractive. Hence, the company is focusing on increasing the customer count.
o Marketing expenses will continue to remain elevated as the company keeps adding newer stores.
o Company has also pulled back on delivery charges to maintain/gain market share.
o Company will share more data points from the next quarter with should help us to get better picture of the company performance.

I’ve only shared my notes on the two verticals as i believe that other verticals are not material at this stage.

I feel that the next 6 months will remain challenging interms of cashflow but I’m not worried as the company has very good cash balance and even in this qtr the company has remained cash positive.

I’m holding the stock for the long term. Zomato is the most efficient company inthe segment and they have been able to build a large scale business much more efficiently than the competition.

[madhavojha]

@madhavojha

you can pile up all the good stories you want, but it only takes one bad story to bring the whole thing crashing down.

[HighCAGR]

Quick commerce is not about offering more discounts or burning cash; it’s primarily focused on convenience. Relying on cash burn is not a sustainable strategy. Compared to competitors like Swiggy or Zepto, Zomato provides fewer discounts, often none at all. Instead, they emphasize enhancing the user experience on their platform and maintaining high delivery standards.

I am from NCR and I have Zomato Gold, Swiggy Black, and Zepto Pass. I can personally vouch for Zomato/Blinkit when it comes to overall experience. On the other hand, Zepto offers the most discounts, but it is burning the most cash.

Quick commerce revolves around convenience, where consumers prefer premium-priced products for immediate delivery and on impulse. In contrast, e-commerce is driven by discounts, with consumers seeking the lowest prices and willing to wait 24 to 48 hours for delivery.

E-commerce giants like Amazon that are entering the quick commerce space are not aiming to disrupt the market or engage in price wars. Rather, they are extending their e-commerce business to experiment in this sector, ensuring they do not miss out on potential growth if quick commerce expands significantly.

Zomato’s food delivery business is stable, and Blinkit offers a generational opportunity to participate in the disruption of industries such as retail, grocery and e-commerce.

Zomato has executed its strategy effectively compared to its peers. It’s important to note that India is currently the only country experiencing a quick commerce boom, and strong execution is crucial in this competitive landscape. Having said that after going through the call it looks like Blinkit may extend losses for the next 2 quarters due to capex on expansion (+1000 more stores) accelerated dark store expansion to dampen profitability and lower throughput on the new stores.

Worth noting:

Bistro (10-minute food delivery) is targeting the large in-office population requiring quick access to snacks, meals, and beverages within 10-15 mins. This market is currently addressed by on-site vendors/vending machines and is not catered to evenly across geographies by the existing food delivery options.

District app: While the core business continues to be profitable, the quarterly loss in 3QFY25 was largely driven by the investment in the new District app (team, marketing, tech costs). Most of the investments from hereon will be focused on getting customers to transition to the new app and growing their selection on the platform. It is likely to operate in losses for the next year.

Disclosure – Invested with 8% allocation so my views can be biased.

[Akrit23]

In an interview yesterday on CNBC TV 18 with PPFAS MF manager, Prashant (Anchor) said that someone who is invested in zepto told him that company has cash for about 6-8 months left in their bank account (Post 2 fund raises) and they want to do an IPO soon. Zepto will have to stop/cut their discounts if they want the valuation. Rs 1200 cr loss in FY24 and still offering more discount. Total uphill task now to show improved metrics if they want to go public. All the efforts of Zepto in particular look like a desperate attempt to break network effect of blinkit and to gain market leadership. If it isn’t able to show profitability path before IPO, then zomato might be the winner. Just my opinion, biased.

(PS - Interview link - https://www.youtube.com/watch?v=zuC5CZrwjlo. Watch from 10th minute for the statement)

[Deven]

Zepto has burned about Rs 1,000-1,100 crore in the last three months in the hypercompetitive space. The firm recently hit $3 billion in gross sales, trailing Blinkit’s $3.7 billion and is expanding its dark store network.

Blinkit expanded its losses in the December quarter to Rs 103 crore due to aggressive expansion, which has impacted the overall profitability of its parent company, Zomato.

Zepto is considering increasing the size of its public offering to $800 million-$1 billion. Most recently valued at $5 billion.

Source: ET Tech

Disc: Invested

[Deven]

Young Turks Reloaded With Albinder Dhindsa, Founder & CEO of Blinkit | CNBC TV18

Whole interview is worth watching. I found interesting is thinking of blinkit.

The quick commerce company caters to a broad customer base that includes younger, working professionals in metro areas as well as an older demographic in smaller cities. The focus is on convenience and immediate need fulfilment.

While Dmart’s target customer base is more general, focusing on price-conscious consumers looking to buy a variety of goods at best price. Dmart model is built around offering the best of prices.

[Investor_No_1]

They say internally they used to refer company as Eternal and had decided the day something significant than Zomato in hatched they would change the name. With blinkit now needing more funds and hence larger revenue, significance of zomato reduces….hence it seems eternal…I maybe wrong in my assessment….

[vikas_singh]

I can see (in mumbai) that Blinkit has started levying handling charges. For orders <200 Rs.16 for > 200 Rs. 12. Has anyone else noticed this?
ive also noticed that they have introduced something in the lines of surge. Free delivery only if the order value is > 500.

[Deven]

Facinating reading of Indus Valley Annual Report 2025. One can download full reports via https://blume.vc/reports/indus-valley-annual-report-2025.

[vada_buffet]

Nice scuttlebutt on Blinkit and Zepto from the rider POV (Twitter thread)

https://x.com/aumvats/status/1907037143664603530

[SALIL_HARLIKAR]

Has anyone who is invested in quick commerce industry knows how to value these companies? Definitely PE is not the answer.

[vi_kar]

i think Blinkits current AOV is much lesser than currently reported (Rs. 700) and should not be extrapolated from here. this is due to 2 reasons:

1. AOV is calculated on the MRP of the products purchased when most of the products sold are 10-15% below MRP. This means the actual average order value which the customer pays is much lesser than the reported AOV (most likely 10-15% lower).
2. Q3 has higher AOVs due to festivities which must not be extrapolated for the year
   Considering both the points I guess fair AOV that customer actually pays must be around 600 for the whole year for Blinkit (I may be wrong).

[vikas_singh]

You should look at Contribution Margin. as CM is calculated after all the discounts.
if the CM is 4% of the headline number of 700 (just an example) then that gives you a better matrix to compare/evaluate.

[Livermore]

Zomato is planning to cap foreign ownership at 49.5% to help Blinkit be eligible to hold inventory and improve margins as reported by news articles

How do members of VP see this? What are other implications and any possible downside from this ?

[Deven]

1. If FII ownership goes above 50%, the company is considered as foreigner-owned. And the implication is some restrictions like FDI limit and a few more.
2. Currently, FIIs own 44.36%, hence there won’t be immediate selling.
3. Due to FII restriction, FIIs will stop buying above 49.5%, hence aggressive buying by FIIs is restricted in future. Sameway dii is more stable vs fii - hence extreme share price volatility may be avoided.
   2 & 3 have limited impact anyway.

[amit151190]

The weightage of Zomato in MSCI and FTSE index can reduce, which may led to some selling by FII and passive funds. Now when blinkit can have it’s own inventory so it’s margins may improve due to private labeling