Eternal’s Blinkit, Swiggy’s Instamart and start-up Zepto have emerged as the top players in India’s booming quick commerce industry, which has seen marquee foreign investors pour in billions in funding.
In the frenzy to gain market share, Blinkit has established itself firmly in the lead by expanding first to smaller towns.
Their rapid expansion, as they aim to deliver everything from milk to iPhones in ten minutes, has weighed on Eternal’s margins and widened Swiggy’s losses.
The trend may begin to show reversal in the second quarter, as these companies benefit from a gradual reduction in discounting and improved unit economics that come with bigger scale and density, two analysts said.
Eternal is set to report results on Thursday, while Swiggy has not yet announced a date for its earnings. “You may see some decline (in losses) for Blinkit. For Swiggy, the decline may be there, but marginally,” said Rishi Jhunjhunwala, equity analyst at IIFL Capital Services. At least four analysts expect Blinkit’s adjusted core loss to narrow sequentially from 1.62 billion rupees ($18.35 million) in the first quarter. ICICI Securities and Elara Capital expect the loss to shrink to about 1 billion rupees in the second quarter.
ICICI Securities and Motilal Oswal expect Blinkit’s adjusted EBITDA margin loss at between 0.7% and 0.6% in the second quarter compared to an EBITDA margin loss of 1.4% in the previous quarter, as a higher store count brings down cost per order.
Meanwhile, analysts at Elara Capital, Anand Rathi and ICICI Securities expect Instamart’s loss to be roughly flat or slightly wider versus the previous quarter’s 8.96 billion rupees loss.
However, Motilal, ICICI and Anand Rathi expect Instamart’s adjusted EBITDA margin loss to narrow between 12.7% and 13.8%, compared to a margin loss of 15.8% of gross order value last quarter.
ETERNAL AND SWIGGY YEAR TO DATE STOCK PERFORMANCE
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