Zomato Sees Fourfold Rise In Gross Order Value Through Store Expansion Plans

The Zomato Ltd.-owned Blinkit turned adjusted Ebitda positive in March, according to the company's financial results on Monday.

Earlier known as Grofers, Blinkit was acquired by Zomato back in 2022 and had weighed on the company's profitability due to its expansion costs. But the company now has an aggressive store expansion plan in place.

This comes as the company posted its fourth consecutive quarter of adjusted Ebitda positivity in the quarter-ended March. The food aggregator also posted an operating profit of Rs 372 crore in the year ended March, as compared with a loss in operating income or the earnings before interest, tax, depreciation and amortisation of Rs 175 crore a year ago.

Aggressive Store Expansion Plan

One of the key vectors for growth of the quick commerce business is store expansion, said Deepinder Goyal, chief executive officer of Zomato.

Zomato's shareholder's letter and results revealed that the company added 75 net new stores in the fourth quarter of financial year 2023-24, taking its total store count to 526.

The company plans to add 100 new stores in the first quarter of the ongoing fiscal, and aims to ramp up total store count to 1,000 stores by the end of March 2025. This could double the company's store count to almost two times in around 12 months, Goyal said in Zomato's earnings call.

Ebitda Position

While for the quarter-ended March, the quick commerce business experience an adjusted Ebitda loss of Rs 37 crore, the business managed to achieve adjusted Ebitda positivity.

As of March, adjusted Ebitda as a percentage of gross order value stood at negative 0.9% as compared with -9.9% in the same quarter a year ago.

According to Goyal, Zomato expects its quick commerce business to maintain Ebitda neutrality (Ebitda to likely hover around 0) for the next few quarters.

However, in a steady state, Zomato expects adjusted Ebitda as a percentage of gross order value to reach 4-5%.

Where Does Zomato Plan To Open Its Stores?

While the company is present in 26 cities, the expansion focus would be in the top eight cities. In Q4, 80% of the newly opened stores were in these eight cities.

Zomato plans to focus on the underpenetrated areas in these cities.

Improvement In Gross Order Value

Bengaluru is the company's second-largest city, as per gross order value, but stands 30% lower than that in Delhi-NCR—which is the company's largest market.

The aim is to penetrate further in cities like Bengaluru, Mumbai and Hyderabad, and bring it on par with Delhi-NCR, according to the company. This is expected to improve the company's gross order value by 4 times.