The Zomato Mindset: Part 2

In my last post on “The Zomato Mindset”, I had mentioned about Blinkit being a 12.75% revenue contributor to Zomato’s top line. The company’s food delivery business saw a macro-slowdown but other quick commerce businesses “Hyperpure” and “Blinkit” displayed substantial growth on local and national level. These are still unprofitable. Blinkit did very well in Q3FY23 and is a renowned name in the sector.  

But given the new developments, even Blinkit now is facing issues. Delivery partners of Blinkit have gone on strike since April 12 when Zomato reduced delivery fees. Dark stores in Delhi-NCR region had a temporary shutdown. This would have led to a huge loss in revenue for Zomato. As ICICI securities predicted, 1% loss in revenue of Blinkit and 0.5% loss in consolidated revenue of Zomato doesn’t show much impact on the top line of Q1FY24. But this will definitely have an impact on the bottom line of Q1FY24 as the company still loss making. The application also was not operational till yesterday and that would have impacted their revenue as it got shut down from 12th of April till 20th of April. 


Even the change in fee structure from a fixed fee model to a hybrid pricing structure does show Zomato’s efforts on cost control (positive from an investor’s perspective) but we aren’t sure if the delivery partners are still happy and will not go on strike again. For now, this has happened in just one region and can happen in other regions as well. Blinkit is planning to pay a supplementary incentive based on distance travelled for a particular order which will definitely reduce costs but not sure if this will work well with the delivery partners or not. This will increase the delivery radius and network coverage for Blinkit.  


Currently all these stores have started operations. Blinkit was acquired in August last year and saw a good revenue growth in Q3FY23 but added to Zomato’s consolidated loss. During Q3FY23, they claimed that they will achieve Adjusted EBITDA of 4-5% of GOV by Q2FY24. Given these new developments and the points that I made in my last post (“The Zomato Mindset”), the question still seems to be unanswered.  

Let us know what you Think in the Comments Section of the Blog. 

 

References: 

https://timesofindia.indiatimes.com/city/bengaluru/zomato-revenue-hit-by-delivery-agents-strike/articleshow/99572167.cms 

https://timesofindia.indiatimes.com/gadgets-news/zomato-issues-clarification-on-blinkit-delivery-staff-strike/articleshow/99621967.cms 

https://inc42.com/buzz/blinkit-delivery-partners-strike-to-have-no-material-impact-on-financial-performance-zomato/ 

https://currentaffairs6663.blogspot.com/2023/02/the-zomato-mindset.html 

Comments

Post a Comment

Popular posts from this blog

Anant Raj: Transforming Real Estate with Cutting-Edge Data Centers

Image
Data Centre- Becoming Investor’s Centre of Attraction As we dive deeper into the digital age, think of data centers as the powerhouses behind our online obsessions. They're the secret sauce that keeps your Netflix running and your Amazon orders flying. As more and more people can't get enough of digital stuff, data centers are evolving faster than a high-speed wi-fi connection. As digital services and infrastructure demand keeps growing, the data center market remains a vital contributor to the global economy in future as well. The data center market in India is growing rapidly; by 2026, it is expected to have doubled in capacity to 2,000 MW, growing at a compound annual growth rate of almost 40%. This growth surge is anticipated to draw substantial investments, with an estimated capital expenditure of Rs 50,000 crore over the next three years until 2026, according to CareEdge Ratings. The company's revenue surge is particularly from its data center operations. With hea...
Read more

Can Raymond be a Turnaround Story?

Image
  Raymond is a very prominent name in Men’s Suiting. I guess everybody in India would know the Brand Name. But not many people would know that Raymond is also present in Realty as well as in Engineering in national and international markets. They also had a Consumer Care business which is acquired by Godrej Consumer Products Ltd. for 2825 crore. As this sale took place, they turned debt free 2 years ahead of guidance. They currently have 1100 crore on cash as of September, 2023. Additionally, Raymond issued NCD of 1,700 cr to RCCL to facilitate the repayment of external debt of 1,029 cr in 1QFY24. Under their textile business, they cater to the B2B and the B2C space. They have brands like Raymond, Park Avenue, Parx and Colorplus. They also cater to Indian wear via their brand Ethnix. They have also diversified themselves into Custom Tailoring. The company has made 46 net store additions during the quarter to take total at 1,453 as of Sep’23 v/s 1,376 in Sep’22. Raymond plans to o...
Read more

Will Dreamfolks Services become a Multibagger?

Image
  The most affected sector during Covid-19 was the Travel Sector. This sector was the most undervalued during the time. But it was known that it will revive once Covid is over. The problem is when it will revive. The patience to let the sector revive was the key. So keeping this sector in focus, I saw that a company called Dreamfolks Services is coming out with an IPO in August, 2022. The price for the IPO was Rs. 308-326 per share. DreamFolks Services Ltd is India's largest airport service aggregator platform facilitating an enhanced airport experience to passengers leveraging a technology-driven platform. Dreamfolks facilitates customers of Clients’ access to the following airport-related services (i) lounges, (ii) food and beverage (iii) spa, (iv) meet and assist, (v), airport transfer (vi) transit hotels /nap room access, and (vii) baggage transfer. They facilitate access to 100% of the 54 lounges currently operational in India. The business is an asset light model. The one...
Read more