I think they’re shutting down “Quick” which was launched 4 months ago, not their core business tho
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FWIW - Amazon entered the quick commerce too with their recent offering “Amazon now”. Look at the cashback offer! Definitely they are going all guns blazing, I’m sure this going to drive some crowd from zepto and blinkit to Amazon. Interesting times ahead.
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last quarter they did say that the next few quarters will be shaky due to the expansion costs of blinkit
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One Basic question out of curiosity:
While going through the Numbers in the Cash flow statement, found the below two statements with staggering numbers ( thousand of crores - Billions of dollars), of which I was blown away:
Are they trading in Mutual funds - Billion of dollars, From where they are getting this much of money ???
Question is Why are they doing this - is this their core Business??
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These are most likely liquid funds churn. The company has a large amount of cash and investments on the book. Their core profitabilty comes from other income.
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This funding is meant to be spent slowly over time on various business items such as:
- Setting up and operate warehousing/dark stores (for Blinkit, etc.)
- Marketing and branding
- Tech stack (software, cloud)
- General business items (Wages etc)
But they are temporarily parking that money until it is all spent in:
- Liquid fund, or mutual funds
- Fixed deposits
- G-secs, or Government Securities
- Corporates deposits
Where they can at least earn some short term returns instead of in a bank account.
Is investing in mutual funds their business?
No, mutual fund investments is not their business.
Food delivery (Zomato), grocery delivery (Blinkit), and related tech/logistics platforms are still their core businesses (Eternal (Zomato)).
Any prudent business is going to invest a substantial sum of idle cash, knowing it is going to be used-- even if delayed.
Is this common?
Yes, this is typical with Treasury.
Like getting a bonus and putting it in a liquid account until you buy a car. Large companies simply do this with bigger funds.
Is This Secure?
Mostly yes:
They are investing in fixed deposits and low risk liquid funds.
ICRA is doing monitoring.
The reports showed no jumps or abuse of the declared use.
Eternal Ltd raised ₹8,500 crore in November 2024 through a Qualified Institutional Placement (QIP) in simple terms, they sold shares to large investors for capital which would contribute to their reserves while holding onto until they capex it for the business (thereby holding it in Treasuries or MF, as opposed to letting it die idle).
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Their food delivery business is highly profitable…it is their qc business which is increasing losses due to which it may seem currently that most of their profits come from other income. However once qc business reaches steady state margin( 5% of gov) and food delivery business reaches maximum margin( 5.5%) , we can expect steady profits and cashflows( preferably by mid of next year since this year will go in capex). It is interesting to note that amazon followed a similiar path in late 90s where they kept on increasing market share , and at same time reported zero to very less profits.
Discl:- Invested and biased.
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Question is not investing in mutual funds, short term Trading in mutual funds, the amounts shown are nearly 5 times the amount raised, in yearly numbers.
Why raise so much money without concrete plans and do non core activities. It takes lot of top management bandwidth, as we are talking here Billions of Dollars.
Thank you for the detailed explanation. I guess this is how new age businesses are run now.
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Yes it is interesting indeed! Also, most new age businesses try to emulate similar models of greater market share & revenues.
Interestingly, same Amazon of 90s has ventured into QC arena in India now.
It is very difficult to judge market cap of new age businesses. Two years back Blinkit didnt exist and today it seems future.
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- ICRA confirms that Zomato has used the funds as planned, with no deviations or diversions.
- Reporting Period: This certification is for the quarter ending March 31, 2025.
- Transparency: Such reports are mandatory disclosures that give confidence to investors that the capital is being used responsibly.
This shows that they have indeed spent the money on what it was intended for.
But this is only showing the amount of QIP proceeds. 
Hope it was helpful.
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If so then the same question where did the company got money for trading in Mutual funds.
Thank you once again for details explanations.
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How they got the money?
They got the money doing ipo and doing qip.
Why they invest in mutual fund?
They keep the money in liquid mutual funds. Earning intrest and very little risk with FD like return . Many companies do this who think they could need the money in immediate future.
Why they have such surplus?
because they want to be in position to have significant cash flow. As the environment is uncertain with tough competition .
Personally I don’t like the cash burning business but many do as they see potential. Since it has a potential to gain major share from unorganised business like grocery shops, restaurants etc. in high spending metro/urban areas.
Disclaimer: Not invested
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Amazon is offering discounts currently to gain market share which doesn’t seem a sustainable strategy, since quick commerce is an execution heavy business. Also, zomato will soon turn into an iocc which will allow them to hold inventory which will lead to better margins than the likes of flipkart and amazon. Players like zepto and swiggy are offering discounts, burning cash with negative contribution margins while zomato has a positive cm offering least amount of discounts, this should be enough to tell you that discounts don’t work in this market.
Discl: Invested and biased.
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Apart from probably first movers advantage, why is Blinkit able to grow with least discount compared to Zepto and Swiggy. where does Big basket stand among all these? For Amazon, its too early to comment on their long term strategy.
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Like I said it is an execution heavy business…where the ui is better, apps which deliver faster gain market share. This is different from ecommerce where since the goods get delivered two to three days later, people spend a lot of time comparing discounts, while this is an instant purchase. Blinkit has consistently delivered a better user experience than zepto and swiggy instamart, you can check out their apps to see this. Bigbasket has 5-10 percent market share, whatever they are doing, not working currently.
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any chance, in Zomato we are seeing the signs of a very very early Amazon ? … just thinking aloud here
NO, even if they have kinda same path, the big difference is amazon’s AWS which makes most of the money for the company, eternal currently does not have any high margin tech business. Plus amazon operated in a different socio economic market and eternal operates in a different market
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I think it might be better than Amazon…blinkit has different levers like ad revenue, owning their own inventory, private labelling which when exercised could lead to massive profits for them. Currently the only reason they’re loss making is because of capex they have to incur in opening stores. Once the capex phase is over, mostly in a year, year and a half, you will see blinkit operating at a huge scale with decent profits and good cash flows being generated. Amazon on the other hand, had to work all through the 90s to generate a decent profit and they’re still loss making in india since they dont own inventory here in the ecommerce business.
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im very skeptical about any of that happening too soon, zomato investors are mostly delusional and do anything to justify high valuations, the thing is their business model is flawed as it works on just giving offers, the only thing good is the advertising part where restaurants can pay them to rank higher. anyways no one is going to create any wealth at this market cap and such crazy valuations, i mean all the best 10xing your 2.2 lac cr market cap with 430+ PE and close to 28lakh other share holders.
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Hearing the high PE argument since it was 40rs, now it is 240 and still the same. When will people move on from PEs and start understanding the business and growth prospects taking forward PE into account. Zomato stopped giving big discounts a long while back, can be seen in their contribution margins. Private labelling is a big opportunity close to 10 percent margins can be made there itself, owning inventory which zomato has already agreed to do will add another 1-2 percent margin. The grocery market in India is close to 800 billion dollars and growing rapidly along with the rest of the retail market. I guess it is true what they say, the pessimist sounds intelligent, while the optimist makes money.
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