Zomato Ltd will continue to floor the accelerator on its Blinkit expansion, burning cash to reach 2,000 dark stores a year ahead of target even as the quick-commerce business plunged its third-quarter profit.
The firm’s profit after tax plummeted 57% year-on-year to ₹59 crore in the December quarter, weighed by Blinkit’s ₹103 crore loss. Zomato is also investing in its new events-focused platform District.
The company is looking to double Blinkit’s dark stores or warehouses to about 2,000 by the end of this year from about 1,007 now. Blinkit opened 152 dark stores in the September quarter and 216 in October-December, adding 1.3 million sq.ft. of warehousing space (which accounts for more than 30% of its overall dark store network).
“The losses in our quick commerce business this quarter are largely on account of pulling forward the growth investments in the business that we would have otherwise made in a staggered manner over the next few quarters,” Zomato founder and chief executive Deepinder Goyal said in a letter to shareholders on Monday. “As of now, it seems like we will get to our target of 2,000 stores by Dec 2025, much earlier than our previous guidance of Dec 2026.”
Also read | Zomato’s losing steam and the Blinkit drag
Quick commerce–which includes the delivery of groceries, food, and other items within minutes—has grown exponentially in India, intensifying competition from incumbent and new players, including Flipkart Minutes.
Blinkit incurred an expenditure of nearly ₹370 crore in the previous two quarters for setting up new warehousing space. Overall, Zomato’s expenses surged to ₹5,533 crore in the third quarter from ₹3,383 crore a year earlier
“As we continue to expand our network rapidly, we expect the quarterly capex (capital expenditure) to stay elevated at these levels for the next few quarters. The higher capex is also the key reason behind the quarterly increase in depreciation,” said Albinder Dhindsa, chief executive of Blinkit, adding that the quick-commerce business will likely post losses for another couple of quarters.
Last week, Zomato infused ₹500 crore into Blinkit, taking its overall investment in the quick-commerce subsidiary to ₹2,800 crore since it acquired the firm (earlier known as Grofers) in June 2022.
In November last year, Zomato raised as much as ₹8,500 crore via qualified institutional placements (QIP) of shares to bulk up its cash reserves amid growing competition in the grocery delivery space.
“The quick-commerce business is increasingly finding product-market fit in India. Strong customer adoption is giving us the confidence to bring forward our store expansion plans and acquire customers faster for existing and new stores,” Dhindsa said.
Zomato’s overall operating revenue surged 64% from a year earlier to ₹5,405 crore in the December quarter led by significant growth in its Hyperpure and Blinkit businesses. Hyperpure, Zomato’s restaurant supplies division, saw its topline double to ₹1,671 crore while Blinkit’s revenue from operations grew 117% to ₹1,399 crore in the third quarter.
Recently, Zomato introduced a standalone app named Bistro by Blinkit to facilitate 10-minute deliveries of snacks and beverages.
“If we manage to find product-market fit and profitability our hope is that this platform could be replicated by different restaurants and cuisine types where demand exists,” Goyal said in his letter to shareholders. “We have also recently launched a quick-delivery feature where we are enabling restaurants listed on Zomato to offer <15 mins delivery by curating their menu items and providing a dedicated delivery fleet. This is currently live in select locations and will be scaled over time.”
Also read | Can Blinkit & co take on Amazon in electronics?
Zomato expects Blinkit to “turn sharply” from being loss-making to meaningfully profitable following the ongoing expansion as a large part of the business starts comprising mature stores, said Akshant Goyal, chief financial officer, Zomato.
Zomato also rolled out a separate app for events and dining, called District, to integrate its existing table-booking functions as well as assets acquired via its acquisition of Paytm’s ticketing business last year.
Most of the investments in District will be on getting customers to transition to the new app and increase the offerings on the platform, said Rahul Ganjoo, head of Zomato’s going-out business.
Zomato shares plunged 7.27% to end Monday’s trading on NSE at ₹230.70 per share, while the broader Nifty 50 climbed 0.61%.
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