ZOMATO - Zomato Limited Share Price

Zomato's management expressed confidence in Blinkit's long-term profitability despite near-term losses due to accelerated store expansion (1,000+ stores by Q3, targeting 2,000 by Dec-25). New stores (30% of network) are primarily densifying existing cities, with smaller cities showing favorable unit economics. Mature stores (top 5%) deliver ~6.4% contribution margins, and management expects scaling to improve margins via cost optimization and higher ad income.

Blinkit's Q3 take rate dipped due to product mix (higher electronics/general merchandise sales) and slight delivery fee cuts amid competition. Marketing costs rose (backloaded in Q3) to support new stores but discounts remain minimal. Customer retention stays strong (40% for 2022 cohort).

Food delivery growth slowed (broad-based macro trends), but management sees limited impact from 10"“15-minute delivery models (still nascent). Zomato launched 15-minute restaurant delivery in select areas but prioritizes service quality over subsidies.

Losses are expected to rise near-term as Blinkit expands, but no cap is set"”growth and market leadership (GOV share stable) are prioritized. Key outlook: Blinkit's scale-driven margin improvement, food delivery resilience, and disciplined growth in a competitive market.

Question 1:
Aditya Soman (CLSA): "Firstly, can you elaborate a little more on the take rate in quick commerce coming off? [...] can you talk about take rate? [...] why do you feel so confident about profitability improving in quick commerce? [...] what proportion of stores will be mature, let's say, in FY26?"
Answer:
Take rate decline was due to product mix shifts (e.g., higher electronics sales with lower take rates). Profitability confidence stems from mature stores (top quartile) delivering healthy margins, offsetting losses from new stores. No specific FY26 mature store proportion shared, but expansion prioritizes densification in existing cities.

Question 2:
Ankur Rudra (JP Morgan): "Is [accelerated expansion] because you see a bigger opportunity [...] or matching competition? [...] opportunity beyond top 10"“20 cities [...] unit economics, bill values, breakeven changes?"
Answer:
Expansion acceleration resulted from operational readiness, not strategic shifts. Smaller cities (~20% of expansion) show attractive ROI; 80% of revenue still from top 8 cities. Economics in smaller cities comparable, but densification required for data clarity.

Question 3:
Vivek Maheshwari (Jefferies): "[Food delivery] slowdown [...] moderation outlook? [...] AOV trends in Blinkit [...] retention amidst competition?"
Answer:
No explicit food delivery recovery timeline; short-term trends influenced by seasonality. Blinkit's AOV rise driven by festivals/electronics, not a secular trend. Retention hinges on service quality, not subsidies; marketing costs may rise due to competition.

Question 4:
Swapnil Potdukhe (JM Financial): "Time for new stores to reach 1,000 orders/day? [...] SSG metrics? [...] take rate vs. MRP accounting?"
Answer:
New stores mature in 2"“3 months. SSG tracked at neighborhood level, showing healthy growth. AOV includes MRP (except F&V); future disclosures may differentiate MRP vs. customer-paid AOV. Losses may rise with expansion acceleration.

Question 5:
Yogesh Aggarwal (HSBC): "Peak contribution margin for top stores? [...] densification impact on delivery costs [...] rental/salary trends?"
Answer:
Contribution margins (6.4% for top stores) can improve via scaling, cost optimization. Densification reduces delivery costs via smaller radii. Rentals/salaries are part of the model; recent spikes may normalize.

Question 6:
Gaurav Malhotra (Axis): "Marketing spend timing [...] losses trajectory?"
Answer:
Marketing spend was backloaded due to store ramp-ups. Losses may increase near-term as new stores mature, but profitability expected to improve as expansion stabilizes.

Question 7:
Gaurav Rateria (Morgan Stanley): "Food delivery margin drivers [...] expansion in top cities [...] unit economics timeline?"
Answer:
Margin drivers include delivery cost optimization, higher fees/AOV. Over 50% expansion in top 8 cities. Profitability depends on slowing store additions; no fixed timeline.

Question 8:
Sachin Salgaonkar (Bank of America): "Quick commerce slowdown [...] competition response [...] 10-minute delivery strategy?"
Answer:
No material slowdown in mature stores. Competition addressed via service quality. Zomato launched sub-15-minute delivery in select areas; Bistro and other models under evaluation.

Question 9:
Vijit Jain (Citigroup): "Zomato's caution on 15-minute delivery [...] delivery charges impact [...] newer cohort retention?"
Answer:
Zomato optimistic about quick delivery but models are nascent. Delivery charges lower in new areas. Newer cohorts align with retention trends; core customers (2+ years) drive GOV.

Question 10:
Rishi Jhunjhunwala (IIFL): "Acquisition/retention costs [...] mature store profitability?"
Answer:
No subsidies for retention; marketing costs higher in competitive markets. Top stores maintained margins; newer stores drove losses.

Question 11:
Manish Poddar (Invesco): "Loss drivers [...] market share in core regions?"
Answer:
Losses driven by infrastructure expansion, not competition. GOV market share stable; order share not tracked due to manipulation risks.