Zomato Unfazed by 57% Profit Decline, Pushes Aggressive Blinkit Expansion

Despite a 57% year-on-year decline in profit, Zomato Ltd remains committed to rapidly expanding Blinkit, aiming to scale its network of dark stores to 2,000 by the end of 2025, a year ahead of its previous target. The company reported a profit after tax of ₹59 crore for the December 2024 quarter, significantly impacted by Blinkit’s ₹103 crore loss. Additionally, Zomato is investing in its newly launched events-focused platform, District.

Blinkit’s Expansion Plans Amid Losses

Zomato plans to double Blinkit’s dark stores from 1,007 to approximately 2,000 by the end of this year. The company opened 152 stores in Q2 (July-September) and 216 in Q3 (October-December), adding 1.3 million sq. ft. of warehousing space, which now accounts for over 30% of Blinkit’s total network.

Founder & CEO Deepinder Goyal acknowledged that Blinkit’s increased losses stem from accelerated investments in expansion that were initially planned to be spread over multiple quarters. However, he expressed confidence that the company would reach its 2,000-store target well ahead of schedule.

Surging Costs & Quick Commerce Competition

The rapid growth of quick commerce—delivering groceries, food, and other essentials within minutes—has intensified competition from Flipkart Minutes and other rivals. Blinkit spent nearly ₹370 crore over two quarters on new warehousing, contributing to Zomato’s total expenses soaring to ₹5,533 crore in Q3, up from ₹3,383 crore a year earlier.

Blinkit CEO Albinder Dhindsa stated that the company expects its capital expenditure (capex) to remain high for the next few quarters, which will also increase depreciation costs. While Blinkit will likely continue posting losses for a few more quarters, Zomato is confident in its long-term profitability.

Last week, Zomato injected ₹500 crore into Blinkit, bringing its total investment in the quick-commerce business to ₹2,800 crore since acquiring it (formerly Grofers) in June 2022. In November 2024, Zomato raised ₹8,500 crore via qualified institutional placements (QIP) to strengthen its cash reserves in response to increasing competition.

Beyond Food: Expanding into Quick Snacks, Events & Restaurant Supplies

Zomato’s operating revenue surged 64% year-on-year to ₹5,405 crore in Q3, driven by strong growth in Hyperpure and Blinkit:

•Hyperpure (restaurant supplies): Revenue doubled to ₹1,671 crore

•Blinkit (quick commerce): Revenue jumped 117% to ₹1,399 crore

Recently, Zomato launched Bistro by Blinkit, a standalone app designed for 10-minute snack and beverage deliveries.

Additionally, Zomato is testing a quick-delivery feature on its main platform, allowing restaurants to offer under-15-minute deliveries through a curated menu and a dedicated delivery fleet. This service is currently available in select locations and will be scaled gradually.

District: Zomato’s Push into Events & Dining

Zomato has also introduced District, a standalone app for event bookings and dining reservations, integrating its table-booking services with features from its acquisition of Paytm’s ticketing business.

According to Rahul Ganjoo, head of Zomato’s going-out business, most investments in District will focus on user adoption and expanding platform offerings.

Market Reaction & Future Outlook

Despite Zomato’s strong revenue growth, its stock price fell 7.27% on Monday, closing at ₹230.70 per share on NSE, even as the broader Nifty 50 index rose 0.61%.

However, Zomato CFO Akshant Goyal expects Blinkit to transition from loss-making to highly profitable, as mature stores start contributing more significantly to overall business performance.