Goldman Sachs: Blinkit Beats Zomato in Value

In a significant development, Goldman Sachs has revised Blinkit’s valuation to $13 billion, surpassing the worth of Zomato’s primary food delivery business. The global brokerage firm valued Blinkit at Rs 119 per share, higher than Zomato’s core food delivery business valued at Rs 98 per share. The rapid surge in Blinkit’s valuation, up from their previous estimate of $8 billion, stems from optimistic projections of its gross order value (GOV). Goldman Sachs forecasts a compound annual growth rate (CAGR) of 53% in Blinkit’s GOV from 2024 to 2027, driving a 32% adjusted revenue CAGR for Zomato overall.

Zomato’s acquisition of Blinkit in 2022 for $568 million initially seemed like a strategic move. However, Blinkit’s stellar performance since the acquisition has propelled its implied valuation to $13 billion, marking a remarkable more than 6-fold increase in valuation on a year-on-year (YoY) basis. Goldman Sachs remarked, “Blinkit’s implied valuation within our Zomato’s sum of the parts (SOTP) now stands at nearly $13 billion, a significant increase from $2 billion in March 2023. Moreover, the per-share implied value of Blinkit, at Rs 119, surpasses that of the food delivery segment, which is Rs 98, marking a notable milestone

Goldman Sachs’ optimistic outlook on Zomato’s revenue growth underscores its potential to capitalize on the burgeoning quick commerce sector. Zomato’s projected revenue CAGR stands out as the highest among Goldman Sachs’ coverage of food delivery and internet companies in India. The brokerage firm also emphasized Zomato’s robust EBITDA margin, highlighting its potential to extend to the quick commerce business. This trend could result in higher margins compared to the food delivery vertical.

In light of these developments, Goldman Sachs maintained its recommendation for investors to ‘buy’ Zomato’s stock, increasing its price target for the food delivery company to Rs 240 from Rs 170. Among the 28 analysts covering Zomato, 24 advocate purchasing the stock, while the remaining recommend holding onto it. As the financial landscape evolves, Zomato’s strategic positioning and Blinkit’s exponential growth underscore the dynamism of India’s tech-driven economy. However, investors are advised to exercise caution and consult qualified professionals before making investment decisions.

(Disclaimer: The views expressed by experts/brokerages in this article are their own and do not reflect those of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any investment choices.)

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