Home / Markets / Stock Markets /  Jefferies analysts visit a Blinkit dark store. What is their view on Zomato shares?

Analysts at Jefferies recently visited a Blinkit dark store in NCR for a perspective on quick-commerce (Q/C) dynamics. In a note, they shared that they were surprised on aspects like portfolio spread, seasonality, micro focus, etc and continue to believe that Q/C is at an early stage, and there is considerable uncertainty on various aspects, including eventual profitability.

That said, we are convinced that it is not just a fad and 30-minute delivery is here to stay. “Prima facie, Blinkit's portfolio spread seems wider than that of peers like Dunzo, Swiggy Instamart and Zepto," Jefferies' note stated, adding that “the early narrative on Q/C has been around small SKU sizes, as customers would rely on Q/C for 'top-ups'. However, we were surprised to see large pack sizes in case of several products like wheat flour, rice, detergents, etc., suggesting that the use case is not restricted to small purchases."

The global brokerage has maintained its buy rating on Zomato shares with a target price of 100. Though, key risks, as per Jefferies could be resurgence of Covid, increase in competition, lower-than-expected market growth, adverse regulations.

Zomato shares made stellar debut on July 23, 2021 on the stock exchanges, but the stock has lost more than 52% of its value since then on concerns about valuations and as global growth stocks cratered. Investors have also not comfortable with the acquisition of Blinkit (formerly known as Grofers), which Zomato recently acquired for 4,447 crore which acted as a catalyst in the food delivery platform's downward movement as Blinkit is a loss making start-up.

Its consolidated net loss in the first quarter of the current financial year almost halved to 186 crore due to higher income. The company had reported a net loss of 360.7 crore in the year-ago period.

During the quarter under review, consolidated revenue from operations rose 16% to 1,414 crore from 1,212 crore in the March quarter and 67% from 844 crore a year ago. This was driven by a 10% sequential jump in its gross order value (GOV) to 6,430 crore in Q1FY23.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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