Zomato clarifies closure of many Blinkit stores, stock rises 5%

The exchanges had sought clarification from Zomato over a report claiming blinkit was temporarily unavailable.

Zomato issued its response to the exchanges on Wednesday.

It said, “Over the past few days we have made changes to the delivery partner payout structure with respect to the Blinkit business to meet the needs of delivery partners, improve customer experience and address cancellations/orders by certain delivery partners in the system.” Rejection fraud can be reduced.”

“Such changes are made from time to time as deemed necessary,” the company’s filing said.

Therefore, Zomato said, to ensure the safety of our employees at stores and delivery partners, they had to close some stores for a few days.

But most of these stores have now resumed operations.

Lastly, Zomato also added, “These disruptions and changes do not have any material impact (i.e. less than 1% revenue impact) on the company’s operating/financial performance and hence we believe that this event does not warrant any disclosure.” does.”

Till the time of writing this news, Zomato shares were trading at 54.51 on the BSE, up 2.17%. The stock rose at least 4.8% with an intraday high on the exchange 55.90 each.

The m-cap of the company is over 46,625 crore at current market value.

Currently, Blinkit delivery executives serving around 50% of dark stores in the NCR region are on strike from April 12, 2023. As per media reports, there is a demand to roll back the recent changes made in the delivery incentive structures in the sector.

Analysts at ICICI Securities estimate that by Q3 FY2023, Blinkit was operating ~370 dark stores across India. This implies ~25% of dark stores are not currently operational. Given that at least 3-4 days of sales have already been lost, this means a ~1% reduction in revenue from Blinkit and ~0.15% of consolidated revenue for Q1FY24 – already.

For Q4 results, in the latest research note, analysts at ICICI Securities said, “We estimate food delivery GOV to be flat sequentially in Q4FY23E (+14.2% YoY) despite Zomato Gold activation. Our view remains restrained given the seasonally weak quarter and online consumption fatigue trends. We estimate that food ordering for AOV declined 1% quarter over quarter as the delivery fee was waived for Gold members. We anticipate that food ordering contribution margin will remain stable quarter-on-quarter as the improvement in restaurant take rates is likely to offset the increase in delivery subsidies.”

Moreover, the brokerage estimates Zomato’s hyperpure business (B2B) to grow 26% QoQ and Blinkit to grow 30% QoQ due to increased geographic reach. Overall, it forecasts adjusted revenue growth of 9.5% QoQ and 68% YoY in Q4FY23E and flat consolidated EBITDA QoQ, indicating sustainable growth in new businesses.

On Zomato stock price, the brokerage’s note said, “Slower growth in Gov was evident due to post-Diwali consumption fatigue and online-to-offline shift. However, based on continued improvement in underlying operating metrics, we maintain a buy on Zomato with a DCF-based target price of Rs 65. We acknowledge that a further deceleration in growth poses risks to our FY24E/FY25E estimates, but we feel that, at CMP, the risks -The prize is still upside down.

Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint. We advise investors to do due diligence with certified experts before making any investment decision.