Blinkit to receive Rs 300 crore from parent company Zomato

Blinkit is owned by Zomato and is based in Gurugram

Blinkit, the quick commerce company, will receive Rs 300 crore in fresh capital infusion from parent company Zomato, regulatory filings sourced via Tofler showed, as competition intensifies in the retail grocery segment.

The latest tranche takes Zomato's investment in Blinkit, which it acquired in August 2022, to a total of Rs 2,300 crore, as per filings, highlighting how the division has grown to be how vital to the food aggregator to stay ahead of rivals.

Blinkit’s domination of the quick commerce segment is quite a turnaround from the time when the company hurtled from one crisis to the other before it was acquired by Zomato. Swiggy Instamart, Zepto, Tata BigBasket are the other companies in the space.

Gurugram-based Zomato acquired Blinkit, formerly Grofers, in a distress sale for Rs 4,447 crore.

When it announced its decision to acquire Blinkit in 2022, investors saw it as a rescue act and Zomato’s shares plunged 20 percent. Zomato, however, continued to be optimistic about Blinkit.

The capital infusion also comes at a time when Zepto, a close competitor, is in the middle of a fresh fundraise and Flipkart is setting up its quick commerce business.

Zomato's arch rival Swiggy, which is preparing to go public later this year, is amping up Swiggy Instamart, its quick commerce arm.

ALSO READ: Zomato's Blinkit turned adjusted EBITDA positive in March; GOV growth outpaces food delivery

Quick commerce is when delivery of groceries or other items is done under 10 minutes. In the beginning, it was largely essentials such as milk, fruits and vegetables which were covered but now firms have expanded into categories such as fashion and home decor.

This expansion is delivering results.

Zomato acquired Blinkit for $568 million in 2022. Its improved performance has pushed Blinkit’s implied valuation to a staggering $13 billion, according to Goldman Sachs analysts. Year-on-year, the valuation grew over 6X.

“We note that Blinkit’s implied valuation in our Zomato’s sum of the parts (SOTP) is (close to) $13 billion now, versus $2 billion in March 2023, with per share implied value of Rs 119 higher than food delivery, at Rs 98, for the first time,” the Goldman Sachs note said.

SOTP is a method used to calculate the valuation of a company by assessing the value of each of its business segments (or subsidiaries) separately and then adding them up to get the total value of the firm.

The $13 billion valuation for Blinkit is an upgrade from Goldman Sachs’ earlier estimate of $8 billion. The upgrades were because of higher gross order value (GOV) estimates, improved industry structure and a larger market potential.