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    Eternal Ltd

    ETERNALStrong
    Consumer Services·1 Aug 2024
    Management Summary

    Zomato's Q1 FY25 was a strong quarter with food delivery growing 27-28% YoY and Blinkit continuing rapid expansion with 113 new stores. The company outlined an ambitious 2,000-store target for Blinkit while maintaining marketplace model commitment. SKU count has grown 5x to 25,000 in two years. Management showed high confidence with no visible demand slowdown and food delivery margins trending toward the 4-5% target. The company also announced plans to launch District as a separate app for the going-out business.

    Highlights

    8

    • Food delivery GOV growing at 27-28% YoY with 20%+ CAGR guidance maintained

    • Blinkit added 113 new dark stores in Q1; new stores reaching 1,000 orders/day in 2-3 months

    • Blinkit SKUs expanded to 25,000 per neighborhood (from 5,000 two years ago)

    • Hyperpure scaled to INR 5,000 crore revenue business

    • ~50-55% of food delivery GOV from Zomato Gold members

    • Blinkit store profitability time decreasing as network and brand strengthen

    • District (going-out) planned as separate app and brand, similar to Blinkit model

    • 2,000 store target by March 2026; only hindrance is execution ability

    Key financials

    Single quarter

    06 metrics
    1. 01Food Delivery GOV Growth YoY27.5%
    2. 02Blinkit New Stores in Quarter113 stores
    3. 03Blinkit Max SKUs per Neighborhood25,000 SKUs
    4. 04Hyperpure Revenue (annualized)₹5,000 Cr
    5. 05Zomato Gold GOV Share52.5%

    Segment breakdown

    Blinkit (Quick Commerce)
    113 stores Stores Added2.5 months Store Breakeven Time25,000 SKUs SKUs per Neighborhood
    Food Delivery
    27.5% GOV Growth YoY52.5% Gold Member GOV Share
    Hyperpure (B2B Supply)
    ₹5,000 Cr Revenue Run Rate
    List

    Guidance & targets

    4
    CategoryTargetPriority
    Food Delivery
    GOV Growth
    20%+ CAGR, currently trending 27-28%
    		High
    Food Delivery
    Adjusted EBITDA Margin
    4-5%
    		High
    Quick Commerce
    Store Count Target
    2,000 stores by March 2026
    		High
    Quick Commerce
    Profitability
    Business to remain profitable; long-term margins comparable to food delivery or higher
    		High

    Risks & concerns

    8
    RiskSeverity

    Heat waves and elections impacted Q1 delivery costs and margins

    Seasonal factors led to slightly lower contribution margins; expected to reverse but different quarters have different dynamics — Both acknowledged

    low

    Social security benefits for delivery partners could impact margins

    No clarity on regulations yet; management expects impact to be absorbed or passed to customers — Analyst downplayed

    medium

    Blinkit cannot own inventory due to FDI/shareholding constraints

    Current shareholding structure prevents inventory ownership; marketplace model maintained as strategic choice but also a structural constraint — Analyst acknowledged

    medium

    Competition entering quick commerce (Flipkart Minutes, others)

    Management focused on own business, growing 120%+ and operating at full capacity; not focused on market share at this stage — Analyst downplayed

    medium

    Areas of Evasion(4)

    • Blinkit GMV category mix
    • Food delivery AOV specifics
    • Specific margin levers
    • User overlap data

    Q&A highlights

    3

    “I don't think it is easy to replicate. Of course, it's always possible, but it requires not just operating rigor but also a lot of systems, knowledge of how the entire ecosystem works”

    Rare articulation of Blinkit's competitive moat beyond just scale - tech systems, operating culture, and franchise partner ecosystem built over years

    asked by Kireet Atluri (Jetha Global)

    1 min read4 chapters

    Detailed Narrative

    01

    Food Delivery Growth Robust at 27-28% with No Slowdown Visible

    Food delivery GOV grew 27-28% YoY in Q1 FY25, with growth broad-based across top 8 and non-top 8 cities. Management saw no visible consumption slowdown despite concerns from other discretionary companies. South India market share has converged close to national average. Gold membership base mature at 50-55% of GOV. Platform fee of INR 5-6 introduced as new revenue lever.

    02

    Blinkit's Path to 2,000 Stores with Scalable Franchise Model

    Blinkit added 113 stores in Q1, with stores reaching 1,000 orders/day in 2-3 months. The company takes upfront capex for stores while franchise partners provide bank guarantees, enabling proven partners to get multiple stores. SKU count expanded 5x to 25,000 per neighborhood in two years while maintaining 10-minute delivery commitment. Only hindrance to reaching 2,000 stores is execution ability.

    03

    Hyperpure Emerges as INR 5,000 Crore Revenue Business

    The B2B supply business Hyperpure has scaled to INR 5,000 crore revenue, exceeding bullish expectations. It serves mid-level restaurants with next-day delivery of quality supplies. Management is running breakeven and experimenting to unlock larger TAM including new restaurant segments. Some capex increase attributed to warehousing capacity expansion for Hyperpure.

    04

    District App Launch and Strategic Cash Preservation

    The going-out business will launch as District, a separate app and brand similar to the Blinkit approach, leveraging Zomato app traffic for lower customer acquisition costs. Management is preserving cash on balance sheet given multiple businesses competing against well-funded private companies. No plans for shareholder distributions or major inorganic moves at this time.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.