Zomato - Should you order?

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What are some of the optionalities that Zomato can look at 2-3 years from today? It is clear that next 2 years, it will earn record profits and I’m sure in next 5-6 years, Zomato will be among top 5 cos in terms of profits because of TAM expansion and new age innovative company

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In their recent presentation they mentioned adding pre cut / pre prepped semi finished products in their hyperpure business. Given their strong brand, they could easily sell these to end consumers as well I think.

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Well I’m trying to see things from the point where by end of March’25, Zomato would have close to 14.5k cr on their books. What would they think would be the future growth engines besides existing business?

What are the plays which is a natural extension to their existing business?

With Flipkart entering into quick commerce, I guess, the longer term thesis is that either Blinkit emerges as a king with another duopolist or gets acquired. Too early to say but Blinkit has enough deep network in major cities so initial foray would mean a lot of price burn from Flipkart and margin compression for others?

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Entering into main e-commerce with the 10min model. This has huge potential. In addition, the accompanying ad-revenue will also be huge.
They already sold iphones, gold coins in Q3. They can extend this to other major categories as well

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I’m trying to find the pdf of HSBC report but they’re saying that Blinkit can be 3% of total digital ad spends in some years and Q3 shareholders letter pointed to growing ad revenues due to improved tracking enabled by Blinkit.

Also because of 10 min delivery, the brands are able to see results in quick time and understand consumer funnel.

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Can someone help explain what is this other income zomato mentions in their pl statement

Its consistently high.

Thanku in advance

My Personal feedback on Blinkit. Have ordered in Bangalore and Chennai in last few weeks. Out of 5 times I ordered, once the delivery time was 16 min , rest others it’s 23,23,26,29 min. The app says the order is packed in 3-4mins and then there is a big delay in assigning delivery agent. Had I seen this just in one place I visited, I would have thought may be it’s a busy locality. Since I saw the same in a different city , I feel they are not having enough delivery agents at least in the localities I stayed. Also the location I stayed had BB Now which delivered the goods in 6 min. So I ended up using BBNow multiple times because of Blinkits delayed delivery time. I think they may need to may need to manage the number of delivery agents better to stay true to their 10 Min delivery tag line.

My only concern was me being invested despite my personal urge to order from Blink had to resort to BBNow more than Blinkit. :joy::wink: The others might do too the same if the delivery times are higher.

Hope it gets better with time.

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Self explanatory. Source: ET

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Recent unfortunate events surrounding the demise of a girl after consuming a birthday cake ordered via Zomato have brought the platform’s safety standards under scrutiny.Will these developments significantly impact Zomato’s sales moving forward?

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Amazing piece! I have one question here… India had some e-com rules where the marketplace could not sell their own products… which is what led to Amazon restructuring some of its sellers etc.

Would this also affect Zomato everyday from an existing and/or a potential regulation pov (just equalising all forms of marketplaces)?

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Great question. I am not sure how Amazon restructured the sellers, but what I know is that we do have brands like ‘Amazon Basics’ listed on Amazon which provide items at lower price. Though I dont exactly know how that works, but I feel the seller listed selling Amazon Basics probably is a separate legal entity over which Amazon has no control except that it has a partnership to manufacture/trade good using Amazon basic logo.

Similarly for Zomato Everyday they might be dealing with separate legal entities (dark kitchens) and having a commission based agreements with them. But the regulatory risk of such structure can’t be ignored.

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@Aditya_Grover what is your take on the continious GST penalty zomato is facing? We know consumer facing companies like HULetc sometimes receive tax demand but for zomato it is like every alternative week. Though zomato have enough cash balance to pay that but Can it be a governance issue?

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@ranjan_r My previous responses got deleted from the platform as they contained the blog link I was referring to. Here is my response to your question without the blog link:

  1. My take on the tax related issues: Sep 30 of 2023, Dec 31 of 2023 and Mar 31 of 2024 were important deadlines by the GST department to send tax notices pertaining to cases pertaining to FY18, FY19 and FY2020. This kind of forced the tax authorities to send notices across corporate India including likes of HUL, Zomato, etc. before the deadline. I have covered the deadline issue in detail in my gaming related blog: Will Nazara receive a GST notice? on my substack - Finding Outperformers

  2. Few of the tax notices are actually the ones based on how industry practices being followed and not specific to Zomato. But since Zomato is listed and is obliged to share the tax notice on exchanges, where as similar notices might be received by Swiggy as well. I am not a tax expert though, but we shall that need to closely track this risk over time.

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Personally I used to order on zomato a lot but now after this news, I try to avoid as much as possible now honestly.

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This is positive for Zomato. Quick commerce is growing extremely fast and now platforms are able to charge more fees. Very good development.

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