Parent company Zomato set to infuse fresh capital of Rs 300 cr in Blinkit

Gurgaon-based Zomato will infuse fresh capital of Rs 300 crore into its quick commerce business, Blinkit, according to a regulatory filing with the Registrar of Companies, as reported by The Economic Times.

With this latest investment, Zomato has invested a total of Rs 2,300 crore in Blinkit since acquiring the company in August 2022. Zomato had purchased Blinkit, formerly known as Grofers, in an all-stock deal valued at Rs 4,477 crore.

Additionally, Zomato will invest Rs 100 crore in its subsidiary, Zomato Entertainment Private Limited, which operates the company’s live events and ticketing businesses.

The latest investment in Blinkit comes at a time when competition in the quick commerce sector is intensifying, with Blinkit competing against Swiggy Instamart and Zepto, which is backed by Nexus Venture Partners.

Swiggy, which also competes with Zomato in the food delivery and dining out segments, has filed draft papers with the market regulator for its Rs 10,414-crore initial public offering (IPO). Meanwhile, Zepto is in discussions to raise funding of $300 million.

The quick delivery segment is also expected to see the entry of horizontal e-commerce players such as Flipkart.

In FY24, Blinkit reported revenues of Rs 2,302 crore, more than double the Rs 1,064 crore reported in FY23.

Increase in dark stores

During Zomato’s quarterly earnings report in May, the company announced that Blinkit would undergo a significant expansion, increasing its number of dark stores to 1,000 from 562 stores as of March 31.

The quick commerce platform is also diversifying its product categories, having already entered segments such as apparel, home decor, consumer electronics, sports goods, and home appliances, which are typically sold by larger online marketplaces such as Amazon and Flipkart.

For Zomato, the quick commerce platform has become a larger driver of shareholder value than its primary food delivery business.

In April, Blinkit’s contribution to its parent Zomato’s market value surpassed that of the food delivery business, according to Goldman Sachs.

The April report estimated Blinkit’s implied value at Rs 119 per share, compared with Rs 98 per share for Zomato’s food delivery business. This translated to a contribution of $13 billion by Blinkit to Zomato's value, up from $2 billion in March 2023, as per Goldman Sachs.

Prior to fully acquiring Blinkit in 2022, Zomato held a 9 per cent stake in the company. In June 2021, the grocery delivery platform had raised $120 million from Zomato and Tiger Global, becoming a unicorn. In March 2022, Blinkit raised $100 million from Zomato through convertible notes, and in the same month, the food delivery company extended a loan of $150 million to the delivery startup it later acquired, the report said.