Zomato shares may surge 18% as Blinkit likely to drive upside: Emkay Global

In an interaction with the industry participants, the brokerage firm discovered that have found good product market fit in metros and large cities and they are gradually expanding their coverage in these markets and testing adjacent markets in a calibrated manner.

The study suggests that major QC companies, Blinkit, Instamart, and Zepto are competing head on with each other and the between the three is not so wide.

QC companies have struck a chord with Indian consumers, particularly the (GenZs and millennials), who started ordering everyday needs across product categories via app, which is delivered within minutes. This led to the category becoming one of the most transacted categories online in the country.

The have seen limited success globally and key variables driving success in India can be attributed to population density, high prevalence of unorganised retail/local kirana stores enabling QC companies to exercise relative buying power with scale and cheap labor costs.

“We expect healthy growth momentum in the near term on the back of steady increase in MTUs and ordering frequency, benefits accruing in take rate from new restaurants addition. has reduced over the last few quarters partly due to growing orders by Gold customers. The company has started charging platform fees on all orders and is piloting priority delivery feature for extra fees in some locations,” Mehta added while commenting on Zomato’s near-term prospects.

The shares of Zomato were trading at Rs 194.15, 0.06% lower on BSE around 1 pm today.

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