Zomato seems prepared to put Rs. 300 crore into its quick commerce subsidiary Blinkit consequently stepping up competition with Swiggy and Zepto. The aim of this strategic investment is to grow Blinkit’s network of dark stores and broaden its product offerings.
A fresh filing with the Registrar of Companies shows that Zomato will inject Rs 300 crore into Blinkit. Zomato has invested Rs 2,300 crore in Blinkit after acquiring the company on August this year, valuing the deal at Rs 4,477 crore in all-stock transaction.
Apart from financial support for Blinkit, Zomato has also given another Rs 100 million to Zomato Entertainment Pvt Ltd, a company that manages ticketing events. Swiggy Instamart tries to compete heavily with Zepto and Blinkit for investment. Moreover, Swiggy has already submitted a draft offer letter to the market regulator for an initial public offering of Rs 10,414 crore even as Jepto is in talks to raise $300 million.
There is also potential for new entrants in the fast delivery space such as Indian retailer Flipkart, which is recently trying to acquire Zepto, an Estonian-based company that has expanded operations across Europe. blinking’s fiscal last year, posted a total revenue of Rs 2,302 crore compared to Rs 1,064 crore a year ago, showing a significant increase, Blinkit’s adjusted Ebitda loss in Q1 fiscal narrowed to Rs 37 crore as compared to Rs 203 crore for the March quarter last year.
On March 31, Blinkit has opened 562 dark stores and intends to increase the count to reach 1,000. Apart from that, Blinkit is expanding its range of products such as: apparel, home decor, electronics, sports goods, and home appliances. Not only has it helped the company in increasing its market valuation, but also Blinkit has become a major shareholder value creator for Zomato surpassing the food delivery business.
In this past April, Goldman Sachs performed a poll that turned up a result stating that Blinkit’s going price is $119 per stock while its competitor’s subsidiary dealing with delivering food was worth $98.The same source revealed how Deutsche Bank had given Zomato $2 billion with the sale of Blinkit from them having been done only in February 2023.Yesterday, Zomato was valued at $19bn according to market capitalisation {$1. 6m}. This rise pushed their share price up by four tenths of one percent, trading on BSE for Rs182. 50.
Zomato owned 9% of Blinkit before fully buying it out in 2022. Later in June 2021 Blinkit became a unicorn thanks to $120m cash inflows from Zomato and Tiger Global. Blinkit also took Use $100 million lent by Zomato through convertible notes when it took another $150 million loan from Zomato in March 2022.
Zomato’s desire to strengthen its presence in the fast delivery space by staying ahead of rivals and meeting rapidly growing demand emphasizes the importance of fast delivery services, hence the significant investment in Blinkit.
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