Goldman Sachs recently stated that Blinkit, the quick commerce startup acquired by Zomato in 2022, is now valued higher than Zomato’s main business of food delivery.
In a recent note, the global brokerage firm valued Blinkit at Rs 119 per share, totaling a $13 billion equity valuation, which is higher than Zomato’s core food delivery business valued at Rs 98 per share.
Goldman Sachs revised Blinkit’s valuation to $13 billion, up from their previous estimate of $8 billion in an April 4 report. The increase was driven by higher gross order value (GOV) projections for Blinkit, which are now approximately 50% higher than estimates from a year ago, according to Goldman Sachs.
Zomato purchased Blinkit for $568 million in 2022. However, since then, Blinkit’s implied valuation has surged to $13 billion due to its enhanced performance, as per Goldman Sachs analysts.
This marks a more than 6-fold increase in valuation on a year-on-year (YoY) basis.
“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,” Goldman Sachs said.
Goldman Sachs forecasts a compound annual growth rate (CAGR) of 53% in Blinkit’s gross order value (GOV) from 2024 to 2027. This growth is expected to drive a 32% adjusted revenue CAGR for Zomato overall.
Among Goldman Sachs’ coverage of food delivery and internet companies in India, Zomato’s projected revenue CAGR stands out as the highest.
The brokerage anticipates further potential for Zomato’s valuation to increase as it enhances profitability, especially in the quick commerce sector.
It also highlighted that Zomato boasts the highest EBITDA margin among global food delivery platforms, and this trend is likely to extend to the quick commerce business, where margins can surpass those of the food delivery vertical.
Goldman Sachs kept advising investors to ‘buy’ Zomato’s stock and increased its price target for the food delivery company to Rs 240 from Rs 170. Out of the 28 analysts covering Zomato, 24 recommend buying the stock, while the rest suggest holding it.
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