Target: ₹425
CMP: ₹323
Blinkit, subsidiary of Eternal, has continued to deliver strong growth, supported by dark-store expansion and increasing category penetration. We estimate Blinkit’s net order value (NOV) to grow 76 per cent y-o-y in Q2FY27E, with adj. EBITDA at ₹150 crore and an adj. EBITDA margin (per cent of NOV) at 0.8 per cent (up 15 bps q-o-q).
Blinkit remains the market leader and the only major QC player to have achieved EBITDA-level profitability.
It remains the only major quick commerce (QC) player to have achieved EBITDA-level profitability; and notably, has sustained profitability despite heightened competitive intensity. We estimate EBITDA margin to improve to 3.1 per cent by FY29E, supported by operating leverage, higher store productivity and improving store economics.
We estimate the food delivery (FD) business to generate adj EBITDA of ₹3.8 billion by FY29E (~5.7 per cent of NOV), providing a significant source of cash generation and supporting overall FCFF.
We think Blinkit’s value proposition of convenience appears appealing and could improve further as its dark-store count nears ~3,000. We see limited near-term risk to the existing duopoly structure in food delivery. As both food delivery (FD) and QC turn into cash-generative engines, we see room for value discovery in ‘going out’. Maintain BUY; TP revised to ₹425, rolling forward by six months.
Risks: Slowdown in discretionary spending; and negative externalities disrupting business operations.