Zomato’s quick delivery service, Blinkit, is growing fast and might become even bigger than its food delivery business. Due to this, brokerage firm JM Financial has raised its target price on Zomato from Rs 200 to Rs 260 while maintaining a Buy rating. Experts at JM Financial say that once Blinkit starts making enough money by early 2025, Zomato will invest more in it. This could give Zomato a significant advantage over its competitors in the long run. JM Financial also thinks Zomato is a good choice for investors because it has a lot of money saved and is doing well in the market. They mentioned that as of December 2023, Zomato had around Rs 12,000 crore in net cash, more than it had in September 2023.
Zomato’s Quick Delivery Service, Blinkit, Set to Outshine Food Delivery
According to JM Financial, Blinkit, Zomato’s quick delivery service, is on the rise and could be even more profitable than its food delivery business in the long term. They believe Blinkit will attract more investors because it’s reliable and focused on retail shopping, which tends to make more money. The report also mentions Zomato’s plans to expand its dark-store network, add more retail categories, and offer a wider range of products. These moves are crucial for Zomato’s growth and sustainability in the coming months.
With a leading market share in Delhi NCR and nearby cities, access to a substantial base of approximately 60 million customers yearly in Zomato’s food delivery vertical, a skilled leadership team in the hyper-local delivery field, and a strong balance sheet, Blinkit stands out as a powerful player in the quick commerce sector.
Challenges and Successes for Blinkit and Zomato
JM Financial points out that Blinkit, Zomato’s quick delivery service, faces some tough challenges. These include being limited to certain areas, especially in West and South India, disruptions in the supply chain like product shortages and rider strikes, and tough competition from other companies.
Meanwhile, Zomato’s stock price is at its highest point in a year, giving investors a whopping 275% return. JM Financial still likes Zomato because they think it’s in a good spot to benefit from the growing demand for quick local delivery services. They also mention that Zomato has a lot of money saved, which is a good sign.
JM Financial values Zomato’s food delivery business at around 50 times its earnings compared to similar companies. They think this is because Zomato offers a variety of food options and operates efficiently without spending a lot on equipment or other expenses.
Blinkit and Zomato’s Growth and Stock Performance
JM Financial raised its estimates for Blinkit’s Gross Order Value (GOV) for the fiscal years 2025 and 2026 by 15% and 41%, respectively. They believe these investments will lead to more orders, driven by increased customers and ordering frequency. They also expect improvements in existing store usage and the addition of new stores in different areas to contribute to this growth.
The stock price of Zomato has been on the rise, jumping over 27% in just one month and giving investors returns of over 61% so far this year. Over the past year, Zomato stock prices have surged by more than 274%. At 11:05 am, Zomato’s share price was trading 1.24% higher at ₹199.25 each on the BSE.
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