Zomato share price: Given a strong growth in quick commerce in last 12-18 months, several platforms such as Flipkart, Amazon, Reliance and Ola are said to be launching quick commerce offerings of their own, with Flipkart coming up with ‘Flipkart Minutes’ in Bangalore. When foreign brokerage UBS tried the Flipkart platform, it found that assortment (30 categories) and delivery timeline (9-10 minutes) were largely in line with incumbent platforms, but prices were 10 per cent lower in its sample of products. The delivery fee too was waived off for the order size above Rs 99, it said.
“While lower pricing could be an initial entry strategy, we will keep an eye on how this evolves with expansion,” it said while keeping its ‘Buy’ call on Zomato intact.
At the end of July, the incumbent platforms in the quick commerce market included Zomato’s Blinkit (with 40-45 per cent market share), Swiggy Instamart (20-25 per cent market share), Zepto (15-20 per cent market share) and BB Now (10-15 per cent market share).
“Given the sector’s strong growth and margin potential over the past year or so, it is not surprising that other companies eye this space as well. There has been news flow highlighting the potential entry of multiple players. For example: Amazon is evaluating entry into this segment, potentially through an investment in Swiggy Instamart, Reliance is setting up its quick commerce business via Jio Mart (refer link), Flipkart is launching “Flipkart Minutes”, its own quick commerce business, and Ola, the ride hailing company, may enter the space and set up its own dark stores,” UBS said.
In the case of Flipkart, UBS said it seems to be replicating the model that has now been proven successful, in terms of the look and feel of the app, the user interface and layout, product categories as well as the monetisation models (delivery fees, platform fees etc.). Pricing, as of now, seems to be lower than in other platforms. “We will keep an eye on how this business is scaled up to other areas of Bangalore and over time, other cities,” it said.
The brokerage said Zomato’s June quarter results surprised it positively with not only stronger quick commerce gross merchandise value (GMV) growth of 130 per cent YoY), but also a strong 27 per cent growth in food delivery, both ahead of consensus estimates.
The Zomato management was optimistic with an implicit positive guidance revision — it is aiming for 25-30 per cent CAGR in food delivery and further doubling of dark store count to 2000 by end-2026.
“Following the result, our FY26-28e GMV estimates are up 20-30 per cent for q-com and 2-3 per cent for food delivery. The faster growth results in slightly lower margins although consolidated adjusted Ebitda estimates are still up 2-3 per cent. We raise our price target to Rs 320 (Rs 260 earlier) and maintain Buy,” it said.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
