Blinkit’s losses are bottoming out, signaling a turnaround for quick commerce.
The worst appears to be over for quick commerce losses, with expectations of a return to breakeven for Blinkit within the next four quarters. This shift follows a period of intense competition and price wars.
- Quick commerce losses are stabilizing, with a return to breakeven expected for Blinkit.
- The food delivery segment is expected to see accelerated growth, driven by customer expansion and innovation.
- Blinkit’s growth is primarily fueled by new customer acquisition, with strong performance in non-metro markets.
- The target price for the stock has been raised due to improved growth prospects and re-rating potential for the quick commerce segment.
While recent results have been mixed, a closer look at segmental performance reveals a strong underlying trend, particularly when excluding advertising and marketing expenses. Karan Taurani, Senior Vice President at Elara Capital, confirms this positive assessment and highlights key drivers for future growth.
Food Delivery Set for Accelerated Growth
Zomato’s food business has shown steady performance, with expectations for Gross Order Value (GOV) growth to accelerate. For FY26, growth is projected at 17–18%, increasing to around 22% from FY27 onwards, aligning with management guidance.
This acceleration is attributed to an expanding customer base, reduced competitive intensity, and a renewed focus on customer loyalty programs. Innovation, including faster delivery times and new service formats like Bistro, is also expected to contribute significantly.
Blinkit: Expansion Fuels Strong Growth
Blinkit is projected to see around 120% year-over-year growth this year, primarily driven by its rapid dark store expansion. The business model relies heavily on new customer acquisition, which accounts for 90–95% of its growth.
Blinkit’s competitive edge lies in its wide assortment, superior customer experience, and efficient delivery times. The company is on track to reach its target of 2,000 stores by December and has raised its long-term guidance to 3,000 stores within two years.
Momentum in Non-Metro Markets
A significant development is Blinkit’s traction in non-metro markets. Despite lower average order values (AOVs) in these regions, the scaling is proving successful, indicating a positive direction for both growth and profitability.
Target Price Revision Reflects Positive Outlook
In light of these improvements, the target price for the stock has been revised upwards from ₹300 to ₹340. This adjustment is based on the enhanced growth prospects in the food delivery segment and the steady growth and improving profitability of the quick commerce business.
The intense competition that previously pressured valuations in the quick commerce space has subsided. This is expected to lead to a re-rating of valuation multiples for the segment, further supporting the stock’s performance.
Profitability Outlook Improving Across Segments
From a consolidated perspective, profitability visibility has improved. The events business is projected to generate approximately $3 billion in GOV and $150 million in positive EBITDA over the next 3–5 years.
While the focus remains on market share gain for quick commerce, it possesses stronger long-term profitability levers than the food delivery segment. This includes potential for higher take rates, increased ad revenue, and platform fees at scale. It is anticipated that longer-term margins for quick commerce could eventually surpass those of food delivery.
