Zomato Steals Spotlight On Unit Economics—'Taught How Quick Comm Is Done': Manish Sonthalia

Quick commerce player Zomato has stolen the spotlight in the quick commerce space by getting its unit economic right and leveraging technology for handling business turnover. According to market veteran Manish Sonthalia of Emkay Investment Managers, the Deepinder Goyal-led new-age tech giant is the only player in the space that has got the 'unit economics right', which is a very important aspect for these companies.

In an exclusive interaction with NDTV Profit on Dec. 10, Sonthalia explained that intermediation businesses leveraging on technology are going to be in a sweet spot. "They connect the buyer and seller and for them, it is very important to get the unit economics right. Without that, these players can not get their business models right," said Manish Sonthalia, Director & Chief Investment Officer, Emkay Investment Managers.

According to Sonthalia, only Zomato has got its unit economics right in the quick commerce space, and the rest of the players are ''discounting a lot'' for getting turnovers. "There's no point in buying turnover. One must be pulling business turnovers based upon competence," said the market expert.

The Emkay Investment official also said that intermediation businesses and the new-age tech space has become a crowded space, however, he hailed Zomato as the top contender. "Zomato has taught everybody how quick commerce is done. But it's a tough business and unit economics is not easy to get even if one has deep pockets. Limited players will get it right and very few players will attain the bulk of the market share," said Sonthalia.

Zomato's quick commerce arm, Blinkit currently leads with a market share of over 40%, followed by Swiggy's Instamart at approximately 32%. Zomato also leads in the food delivery space with a market share of over 45%.

Discussing the earnings outlook for FY27, Sonthalia is hopeful that the next fiscal year will be better than FY25 and FY26, in terms of earnings growth. Coming to sectors, he believes that investors can make a lot of money in the capital market space, by looking out for ''duopolies''.

"The profit pool in the capital market space is going to grow over time...so a disproportionate benefit is going to come across the space," he told NDTV Profit. Within this, he said that investors are likely alluded to the asset management company space for investments in mutual funds.

"In the AMC space, the top 10 players get the bulk of SIPs having very high operating and leveraging businesses. The total income in the AMC space will double in the next five years irrespective of flows coming in," Sonthalia predicts. "The major cost item is basically people cost which is 30% of the revenue, so capital market is a very big space and lot of money to be made," he added.