According to regulatory filings from Tofler, Blinkit, a fast-commerce company, is set to receive Rs 300 crore in new funding from its parent company, Zomato. This latest investment brings Zomato’s total investment in Blinkit, acquired in August 2022, to Rs 2,300 crore. This underscores the growing importance of Blinkit for Zomato to stay competitive in the grocery retail sector.
Blinkit’s rise in the quick commerce sector marks a significant shift from its troubled past before Zomato’s acquisition. Swiggy Instamart, Zepto, and Tata BigBasket are key players in this competitive space. Zomato, based in Gurugram, acquired Blinkit (formerly Grofers) in a distressed sale for Rs 4,447 crore. Initially, investors viewed the acquisition as a rescue effort, causing Zomato’s shares to drop by 20%. Despite this, Zomato remained positive about Blinkit’s potential.
The new investment arrives as Zepto, a strong competitor, is currently raising funds, and Flipkart is entering the quick commerce sector. Swiggy, Zomato’s main competitor, is boosting its quick commerce division, Swiggy Instamart, in preparation for its upcoming public listing.
Quick commerce involves delivering groceries or other items within 10 minutes. Initially, it focused on essentials like milk, fruits, and vegetables, but now companies have expanded into areas such as fashion and home decor.
This expansion has proven successful. Zomato purchased Blinkit for $568 million in 2022. The improved performance has boosted Blinkit’s implied value to an impressive $13 billion, according to Goldman Sachs analysts. The valuation has grown over six times year-on-year.
Goldman Sachs highlighted that Blinkit’ implied value in Zomato’s sum of the parts (SOTP) is now close to $13 billion, up from $2 billion in March 2023. The per-share implied value is Rs 119, surpassing food delivery at Rs 98 for the first time.
SOTP is a technique for determining a company’s value by evaluating each of its business divisions individually and adding them to find the total firm value.
The $13 billion valuation for Blinkit represents an increase from Goldman Sachs’ previous valuation of $8 billion. The upgrades were due to higher gross order value (GOV) estimates, enhancements in the industry’s structure, and a more extensive market potential.
