Zomato’s food delivery business may turn profitable in the next few quarters and it could break even at a company-level in the next 6-12 months, without accounting for Blinkit-related costs, chief financial officer (CFO) Akshant Goyal said on Tuesday.
The Gurugram-based firm acquired Blinkit, a quick-commerce app, in June for `4,447 crore — about 40% lower than a valuation it once commanded. Speaking at the company’s first annual general meeting (AGM) since it went public, Goyal also said Blinkit will be in an investment mode for a bit longer than 12 months. In March, Zomato announced an investment of $150 million into Blinkit in the form of debt to help it to meet its dues to vendors and other creditors. Zomato had then said the loan to Blinkit will be disbursed in multiple tranches with a 12% annual interest rate. Prior to that, it had invested around $100 million into Blinkit in August 2021. At that time, Zomato had said it has plans to invest a total of $400 million into Blinkit, part of which would be structured as convertible notes.
As of May, Blinkit had an average order value (AOV) of around `509 across 7.9 million orders, with an average customer frequency of about 3.50 per month. Despite that, Blinkit reported a loss of roughly `66 crore on revenues of `58 crore, according to Zomato shareholders’ letter. Co-founder and CEO Deepinder Goyal had earlier said he expects AOVs in q-commerce to be higher than food delivery in the near future. Having a quick-commerce company under its fold will also help increase Zomato’s total addressable market “manifold”, the firm’s director, Kaushik Dutta, said at the virtual AGM. The CFO said the loss-making company will focus on generating cash, and meanwhile, it will use the `11,000 crore that it has in banks, to fund its losses and not make make new investments with that capital. The company’s third unit, Hyperpure, the B2B arm that supplies ingredients to restaurants, has the potential to become as large or larger than the food delivery business, Dutta told shareholders at the AGM.
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Hyperpure registered a revenue of `270 crore in Q1FY23, from Q4FY22’s `190 crore, while its Ebitda improved to -13% from -20%. CEO Goyal had said the business is still at its nascent stage and as it enters more cities, the topline and margins would improve further. It is currently present in 10 cities, but the top four of them drive about 75% of the business.