# Swiggy vs Zomato: The Battle for India's Stomach

> Two giants. One market. A deep-dive into unit economics, quick commerce bets, and who's better positioned to own India's food economy.

**Companies**: Swiggy, Eternal
**Sectors**: Technology
**Published**: 2026-03-27
**Last Updated**: 2026-03-30
**Source**: https://thesisloop.ai/thesis/773b1a36-f0f8-43c3-af14-32ca25d84521

## Score Overview

| Company | Management | Business Model | Future Growth | Risk |
|---------|-----------|---------------|--------------|------|
| Swiggy | 76/100 | 69/100 | 59/100 | 55/100 |
| Eternal | 74/100 | 62/100 | 63/100 | 54/100 |

## Swiggy (BSE:544285)

**Sector**: Technology | **Industry**: E-Retail/ E-Commerce

### Management Credibility

- **[CATALYST] Government Intervention on Delivery Timelines** (POSITIVE, EXCEEDED): The Bolt 10-minute delivery service has already expanded to over 700 cities as of Q2 FY26. (1 exceeded across 1 tracked commitment)
  > Swiggy is strengthening its digital systems and internal processes to seamlessly integrate the new requirements into our operating model.
- **[METRIC] Average Order Value (AOV)** (POSITIVE, EXCEEDED): Quick commerce AOV grew by 25.6% YoY, significantly exceeding the double-digit growth target. (5 exceeded across 5 tracked commitments)
  > We maintain our guidance of delivering double-digit Y-o-Y growth for the near future, and that is a meaningful change.
- **[METRIC] Contribution Margin per Order** (NEGATIVE, MISSED): The improvement in Q3 FY26 was limited to only 9 bps QoQ as gains were reinvested into a no-fee experiment. (1 missed, 2 revised, 2 in progress across 5 tracked commitments)
  > And our guidance as we have given even in our letters is that we're gunning for overall contribution margin breakeven of Instamart to be hit by OND (Oct-Dec) '25.
- **[METRIC] Gross Merchandise Value (GMV) Growth** (POSITIVE, EXCEEDED): The company delivered over 100% GOV growth for the third consecutive quarter while adding only approximately 40 stores, significantly lower than competitors. (3 exceeded, 2 met across 5 tracked commitments)
  > I think overall, year-on-year, we are growing 19.2%, which is within the range of what we have guided the market at about 18% to 22% growth for the category.
- **[PRINCIPLE] GMV vs Revenue Recognition** (NEUTRAL): Management targets high-teens growth in Food Delivery Gross Order Value (GOV) in the near-term. — target: High-teens growth
  > We remain confident of our high-teens growth outlook in the near-term.
- **[METRIC] Monthly Transacting Users (MTU)** (NEUTRAL): The company is focused on expanding the Monthly Transacting User (MTU) base as a critical driver for the long-term health of the food delivery category.
  > Expanding MTU base is critical For the long-term health of the food delivery category
- **[METRIC] Order Frequency per Active Customer (METRIC)** (NEUTRAL): Swiggy aims to increase throughput per store in the quick commerce segment by 25%-30% in the near-term. — target: 25%-30%
  > In the near-term, getting a 25%-30% increase in our throughput per store is a near-term target.
- **[PRINCIPLE] FDI Compliance and Marketplace Model Constraints (PRINCIPLE)** (NEUTRAL, IN_PROGRESS): Domestic shareholding has reached approximately 47%. Management expects to convert to an IOCC (inventory-led capable) structure once it hits the 50% majority mark. (1 in progress across 1 tracked commitment)
  > In terms of the overall benefit of that model, we do expect that to have an accretion of roughly 50 basis points to 70 basis points.
- **[PRINCIPLE] Last-Mile Logistics Cost Structure** (POSITIVE, IN_PROGRESS): Capex for the quarter was INR 319 Cr, with management noting that network expansion has been front-loaded and requirements will reduce incrementally. (1 in progress across 1 tracked commitment)
  > As we calibrate our network expansion and improve warehouse-efficiency, capacity utilisation will improve over this fiscal year, driving down capex requirements incrementally.
- **[PRINCIPLE] Unit Economics at Contribution Margin Level** (NEGATIVE, MISSED): Food delivery continues to be profitable with a run rate of INR 1,000 crores annually, and management reiterated the 5% medium-term EBITDA margin target. (1 in progress, 1 exceeded, 1 missed across 3 tracked commitments)
  > I think from a medium-term guidance, we do believe that there is another 150 basis points improvement that can be made from here on in our guidance to steady state to build out 5% and we are positive to be able to achieve that.
- **[TREND] Quick Commerce Dark Store Expansion** (POSITIVE, IN_PROGRESS): Management confirmed they are on track to reach the 4 million square foot target by March 2025, having already doubled coverage from 2 million. (1 in progress across 1 tracked commitment)
  > Our guidance from, you know, for H2 was doubling our square footage coverage from 2 million to 4 million. We are sticking to that guidance. As you can see that this means that there is a back-ended growth in quarter 4 and we are on track to achieve that.
- **[TREND] Quick Commerce Disruption** (POSITIVE, EXCEEDED): The company surpassed its March 2025 target of 4 million sq ft, reaching 4.3 million sq ft by June 30, 2025. (5 exceeded across 5 tracked commitments)
  > And we are guiding for 4 million square feet of dark store area by March '25. That's almost doubling our dark store capacity in let's say four to six months
- **[TREND] Retail Media Advertising Monetization** (NEUTRAL): Management expects advertising revenue to reach a steady state of 6% of GOV. — target: 6% of GOV (+2 more commitments)
  > And our overall steady state, we expect it to be in the zip code of 6% to GOV. So, that’s one area of improvement.
- **[TREND] Value Commerce and Tier-2/3 Penetration** (NEUTRAL): The company plans to expand its quick commerce footprint to approximately 75 cities. — target: 75 cities (+2 more commitments)
  > We look at a target of around 75 cities for our growth, which is something that we believe is the market very clear and essentially present.
- Management confirmed that the large network expansion is front-loaded and future CAPEX will be more graded and measured. (2 in progress, 2 met across 4 tracked commitments) (POSITIVE, MET)
  > We remain reasonably confident of guiding towards the 5% EBITDA number that's been there in public domain, yes.

### Business Model

- **[METRIC] Average Order Value (AOV)** (POSITIVE, Change: SHIFTED): Quick-commerce (Instamart) growth accelerated significantly with GOV up 107.6% YoY, driven by a 16% QoQ jump in Average Order Value (AOV) to INR 612. (3 expanding, 2 shifted)
  > GOV growth accelerated to 107.6% YoY (+21.1% QoQ) to INR 5,655 Cr... Average order value grew 25.6% YoY to INR 612.
- **[METRIC] Contribution Margin per Order** (POSITIVE, Change: EXPANDING): Food delivery GOV grew 18.8% YoY to INR 8,086 Cr, but Adjusted EBITDA margin dipped slightly to 2.4% from 2.9% in the previous quarter due to seasonal delivery costs and annual appraisals. (5 expanding across 1 engine)
  > Food delivery... Adjusted Revenue (INR crore) Q3FY26: 2,277... Adjusted EBITDA Margin rose to 3.0% of GOV
- **[METRIC] Gross Merchandise Value (GMV) Growth** (POSITIVE, Change: EXPANDING): Food delivery growth exceeded guidance, reaching 20.5% on Gross Order Value (GOV) and 22% on Monthly Transacting Users (MTU), with expanding margins. (4 expanding, 1 stable)
  > We've grown 20.5% on GOV and 22% on MTU. The guidance remains at 18%-20%... we are feeling more confident about hovering near the upper end of the range.
- **[METRIC] Monthly Transacting Users (MTU)** (POSITIVE, Change: EXPANDING): The platform's cross-selling flywheel is strengthening, with 35.4% of users now transacting across more than one service, up from 26.7% a year ago. (5 expanding)
  > Platform MTU continue to rise secularly, coupled with growing number of users using multiple services... Users using more than one service: 36.1%
- **[PRINCIPLE] GMV vs Revenue Recognition** (NEGATIVE, Change: CONTRACTING): The implied take rate (revenue as % of GMV) contracted this quarter due to a shift in product mix and the decision to waive certain consumer fees to test user acquisition. (1 contracting)
  > So yes, largely, it is mix. And in the latest quarter, it's also to do with some of the consumer side fees that we chose to give up.
- **[PRINCIPLE] Last-Mile Logistics Cost Structure** (POSITIVE, Change: SHIFTED): Swiggy expanded its dark store footprint to 4.3 million sq ft, adding 41 new stores and entering 3 new cities to support the rapid growth of Instamart. (2 expanding, 1 shifted across 1 engine)
  > Supply Chain & Distribution... Revenue (INR Cr) Q3FY26: 2,981... YoY % 76.1%... Adjusted EBITDA margin (as a % of Revenue) -1.4%
- **[PRINCIPLE] Unit Economics at Contribution Margin Level** (POSITIVE, Change: SHIFTED): Management is prioritizing 'structural growth' and contribution margin over 'bad growth' driven by irrational discounting, aiming for breakeven by AMJ'26 (April-June 2026). (1 shifted, 1 expanding)
  > We believe that is the right path which we have always committed to, and we are essentially reiterating that commitment by saying that we'll be at contribution margin zero in the quarter of AMJ’26.
- **[TREND] Quick Commerce Disruption** (POSITIVE, Change: EXPANDING): Instamart is successfully shifting its product mix toward higher-margin non-grocery items, which now contribute 18.5% of GOV compared to 7% a year ago. (1 shifted, 4 expanding across 2 engines)
  > Quick-commerce... Adjusted Revenue (INR crore) Q3FY26: 1,052... GOV grew 103.2% YoY... Adjusted EBITDA margin improved by 65bps QoQ to -11.4%
- **[TREND] Retail Media Advertising Monetization** (POSITIVE, Change: EXPANDING): Monetization through brand partnerships and advertising is expanding as the scale of operations increases, providing a key lever for margin improvement. (2 expanding)
  > Now the scale of the movement for all the items that we sell, there is a bigger opportunity of monetization with the brands that we explored.
- **[TREND] Value Commerce and Tier-2/3 Penetration** (NEUTRAL): Swiggy's operations are entirely domestic within India, with a significant focus on Tier 2 and Tier 3 towns for its warehousing and dark store expansion to improve supply chain efficiency.
  > Now talking about the quarter on hand if you look at our overall warehousing capacity and a lot of this warehousing capacity is also coming into Tier 2, Tier 3 towns where we expanded
- The company is further strengthening its balance sheet through a proposed QIP to build strategic reserves for growth and innovation. (5 expanding across 1 engine) (POSITIVE, Change: EXPANDING)
  > Out of Home Consumption... Adjusted Revenue (INR crore) Q3FY26: 111... Adjusted EBITDA Margin (% of GOV) 0.7%

### Future Growth

- **[CATALYST] Government Intervention on Delivery Timelines** (NEUTRAL): New government labor codes regarding social security for gig workers may increase operating costs, though the company is currently upgrading systems to prepare for the impact.
  > The Code on Social Security, 2020 (CoSS)... brings into effect a unified framework aimed at extending social-security access to millions of platform and gig workers... we remain focused on readiness.
- **[METRIC] Average Order Value (AOV)** (POSITIVE, Trend: ACCELERATING): AOV is trending upward as the product mix shifts toward higher-value non-grocery items and the 'Maxxsaver' feature encourages larger baskets. (4 accelerating, 1 new trend across 5 signals, 1 leading indicator)
  > AOV grew ~40% YoY to INR 746, led by continued expansion of non-grocery selection and larger-basket buying behaviour
- **[METRIC] Contribution Margin per Order** (NEUTRAL): Swiggy is targeting a significant improvement in its Quick Commerce (Instamart) profit margins, aiming to reach a 'breakeven' point (where costs match revenue) in the near future. — Quick Commerce Contribution Margin Improvement: +250 bps
  > So we want to remain focused and over the next two quarters, getting 250 basis points with some of these reversals as well as some of the investment choices that we're going to make.
- **[METRIC] Gross Merchandise Value (GMV) Growth** (POSITIVE, Trend: ACCELERATING): Food delivery growth is accelerating, exceeding management's previous guidance of 18%-20% to reach 20.5% GOV growth and 22% MTU growth. (3 accelerating, 2 steady across 5 signals)
  > Food delivery GOV grew 20.5% YoY to INR 8959 Cr; growth-rate at a 3 year high... Bolt and 99-store together constitute well over a fifth of Food delivery platform volumes now.
- **[METRIC] Monthly Transacting Users (MTU)** (NEUTRAL): The company is seeing a significant increase in the number of people using the food delivery platform monthly, indicating high customer acquisition and platform stickiness. — Monthly Transacting Users (MTU) - Food Delivery: 22% YoY (+1 more signal)
  > We've grown 20.5% on GOV and 22% on MTU.
- **[PRINCIPLE] FDI Compliance and Marketplace Model Constraints** (POSITIVE, Trend: STEADY): The company maintains a strong cash position of approximately $2 billion (INR 16,000+ Cr), which it is using strategically to fund growth while moving toward an IOCC (Indian Owned and Controlled Company) structure. (1 steady across 1 signal)
  > you now have a cash balance of almost $2 billion... We are currently at around roughly 47% in terms of our overall domestic shareholder base. And when we hit the majority mark... we do expect to convert into an IOCC structure.
- **[PRINCIPLE] Last-Mile Logistics Cost Structure** (POSITIVE, Trend: ACCELERATING): Swiggy is accelerating its darkstore footprint, adding 96 stores in Q3 and nearly matching that in the single month of January (86 stores), staying on track to double square footage. (4 accelerating, 1 decelerating across 5 signals, 2 leading indicators)
  > Overall, if you look at the last 4 quarters, we have more than doubled our warehousing capacity, which has been a key component of the capex spending.
- **[PRINCIPLE] Unit Economics at Contribution Margin Level** (POSITIVE, Trend: ACCELERATING): The contribution of non-grocery items to the total sales mix has more than doubled in a year, significantly improving the platform's monetization potential. (1 accelerating across 1 signal)
  > In the near-term, getting a 25%-30% increase in our throughput per store is a near-term target.
- **[TREND] Market Consolidation Around Conglomerates** (NEUTRAL): Management identifies 'irrational' competition—where competitors spend heavily on discounts to buy market share—as a primary headwind that is currently slowing their growth rate.
  > one of the primary is obviously the irrationality in the market which has impacted both the listed players in this particular space. We believe that irrationality will continue and will have a headwind on our growth
- **[TREND] Quick Commerce Disruption** (POSITIVE, Trend: ACCELERATING): Instamart's growth is accelerating significantly, with GOV growth jumping from 76% to 101% over the last three quarters. (5 accelerating across 5 signals)
  > GOV grew 103.2% YoY (+13.0% QoQ) to INR 7,938 Cr, 4th consecutive quarter with >100% GOV growth (YoY)
- **[TREND] Retail Media Advertising Monetization** (POSITIVE, Trend: ACCELERATING): Advertising revenue is moving up 'meaningfully,' particularly in quick commerce, though it is currently creating a temporary increase in working capital due to FMCG credit cycles. (3 accelerating, 1 new trend, 1 steady across 5 signals)
  > Now the scale of the movement for all the items that we sell, there is a bigger opportunity of monetization with the brands that we explored... it actually comes almost every quarter.
- **[TREND] Value Commerce and Tier-2/3 Penetration** (NEUTRAL): The company is expanding its Quick Commerce footprint into smaller Tier 2 and Tier 3 cities, supported by new warehousing infrastructure to reduce delivery times.
  > Now talking about the quarter on hand if you look at our overall warehousing capacity and a lot of this warehousing capacity is also coming into Tier 2, Tier 3 towns where we expanded
- The company maintains a strong liquidity position with Rs. 5,500 crores in cash, which they deem sufficient to fund Instamart's path to profitability without requiring further equity raises. (1 steady, 1 new trend across 2 signals, 2 leading indicators) (POSITIVE, Trend: NEW_TREND)
  > Toing and Snacc are separate apps... experiments built on a different chassis than our primary Food delivery engine... Toing works with restaurants and Snacc through micro-kitchens, both try to deliver cheaper or functional meals.

### Risk Assessment

- **[METRIC] Average Order Value (AOV)** (NEUTRAL, Risk: MODERATE): Order growth moderated as the company intentionally let go of low-AOV (Average Order Value) orders that were not profitable, prioritizing 'quality' growth over pure volume. (2 stable)
  > Order-growth in the past couple of quarters had been impacted as a result of Maxxsaver-led cannibalisation (as larger carts were built by customers)
- **[METRIC] Order Frequency per Active Customer** (NEUTRAL, Risk: MODERATE): Quick-commerce order growth has slowed to single digits due to the company's decision to stop chasing low-value orders and aggressive pricing from competitors. [DEMAND]
  > Quick-commerce order-growth has remained in mid-to-high single digits... impacted as a result of Maxxsaver-led cannibalisation... and weaning away of low-AOV orders. This was amplified in Q3 by competitive action.
- **[TREND] Retail Media Advertising Monetization** (POSITIVE): Take rates (the percentage of sales Swiggy keeps as revenue) are expected to improve as the company increases non-grocery mix (now 18.5%) and unlocks higher advertising revenue from brands. (2 easing)
  > Yes, sure. You see, over the last year, if you look from Q1 FY ‘25 to Q1 FY ‘26, we have grown from 6.6% to 18.5% of the non-grocery business. That will keep on going up.
- **[CATALYST] Government Intervention on Delivery Timelines** (NEGATIVE, Risk: MODERATE): Management notes seasonal low availability of delivery partners due to 'reverse-migration' and rains, requiring incremental investments, which mirrors the cost pressures expected from formal labor regulations. (2 stable, 1 intensifying)
  > In terms of the gig economy question, I think, obviously, these are still work in progress in terms of the legislation overall developing. Whatever we have seen doesn't give us any shock element. There could be a small impact, but that would be a pass-through impact
- **[METRIC] Average Order Value (AOV) (METRIC)** (NEUTRAL): Order growth was intentionally moderated (cart-consolidation) to favor higher Average Order Value (AOV), which jumped 16% QoQ to INR 612. (1 stable)
  > Some cart-consolidation led by Maxxsaver and letting go of some low AOV orders and unprofitable users drove a lower order growth, in favour of higher value-growth.
- **[METRIC] Contribution Margin per Order** (NEGATIVE, Risk: MODERATE): Losses remain high and have slightly intensified on an absolute basis, with Adjusted EBITDA loss increasing from INR 840 Cr in Q4FY25 to INR 896 Cr in Q1FY26, despite margin percentage improvements. (1 intensifying, 4 easing, 2 high-severity)
  > contribution is in that zip code of INR200 crores still loss on a quarterly basis, that EBITDA number is still in that INR800-900 crores quarterly loss run rate.
- **[METRIC] Gross Merchandise Value (GMV) Growth** (POSITIVE, Risk: MODERATE): Growth has accelerated significantly, with GOV growth reaching 101% over the last three quarters. Monthly Transacting Users (MTU) grew by 2.8 million in the last quarter alone. (3 easing, 1 stable, 1 intensifying)
  > I mean, obviously, your growth compared with, let's say, Blinkit is a lot lower. And at the same time, we see the other competitors discount heavily.
- **[METRIC] Monthly Transacting Users (MTU)** (POSITIVE, Risk: MODERATE): Management claims retention rates for mature cohorts are improving and that incentives are primarily for 'trials' to build habits. However, they admit to 'heightened incentives' for the large influx of new users. (1 stable, 1 easing)
  > We believe that the irrationality of that growth is so high that it is leading to customers switching from one platform to the other without having any kind of loyalty.
- **[PRINCIPLE] GMV vs Revenue Recognition** (NEGATIVE, Risk: MODERATE): The gap between Net Order Value (NOV) and Gross Order Value (GOV) widened, with NOV growth at 16% vs GOV at 20%. Discounts impacted contribution by approximately 250 basis points. (2 intensifying, 1 stable)
  > when I look at your GMV growth for the last four quarters and compare it with the revenue growth, revenue growth is lower than GMV growth. So in effect, the implied take rate has been coming down.
- **[PRINCIPLE] Last-Mile Logistics Cost Structure** (NEUTRAL, Risk: MODERATE): The company is spending heavily on building large warehouses (capex) to expand into smaller towns, which puts pressure on their cash reserves if these areas don't grow as expected. [EXECUTION] (+1 more risk)
  > Overall, if you look at the last 4 quarters, we have more than doubled our warehousing capacity, which has been a key component of the capex spending.
- **[PRINCIPLE] Unit Economics at Contribution Margin Level** (NEUTRAL): Management has pushed back the contribution margin breakeven timeline for Instamart from Q3 FY26 to a range of 3 to 5 quarters (potentially Q1 FY27) to maintain 'flexibility' for growth. (1 intensifying, 1 easing)
  > your contribution margin breakeven timelines have also been changed from 3Q FY ‘26 to it goes up to 1Q FY ‘27.
- **[TREND] Quick Commerce Disruption** (NEGATIVE, Risk: HIGH): Competition remains 'irrational' and 'heightened,' leading Swiggy to reinvest margin gains into a no-fee experiment that limited profitability improvements. Management is now reviewing these investments due to lower-than-expected order growth. (1 intensifying, 4 stable, 2 high-severity)
  > almost 90 basis points of contribution margin expansion was reinvested into this no fee of about INR299 campaign. So is it fair to assume that in the absence of this, the reported revenue and EBITDA would have been higher by around INR70-80 crores ?
- **[METRIC] Other Findings** (POSITIVE, Risk: LOW): While losses continue, management claims a strong balance sheet with Rs. 5,500 crores in cash and asserts that no further equity raising is required as contribution losses have peaked. (2 easing)
  > Adjusted Revenue (INR Cr) 9, YoY % -76.6%... Adjusted EBITDA margin (as a % of Adjusted Revenue) -427.2%

### Scenario Analysis

- 1 positive impact identified; 1 negative impact identified (NEUTRAL)
  > As a result, earnings per hour for our delivery partners have consistently continued to increase... as a result of inflation (including competition-led, especially during high-demand periods like festivals or low-supply periods like rains).
- 4 positive impacts identified (POSITIVE)
  > And there the efficiencies will not come from reduction in earnings per hour of people, but more from ability to get the network to the higher productivity levels, which is, as you mentioned, intelligent batching, right, not in a ad hoc way, which we do to some extent already, and that modulates as 

## Eternal (BSE:543320)

**Sector**: Technology | **Industry**: E-Retail/ E-Commerce

### Management Credibility

- **[CATALYST] GST E-Commerce Operator Compliance** (NEUTRAL): Management expects a positive impact on quick commerce demand from Q3FY26 onwards due to GST rate cuts.
  > We certainly expect a positive rub-off on demand due to this from Q3FY26 onwards (given the changes came into effect only towards the end of Q2FY26).
- **[METRIC] Average Order Value (AOV)** (NEGATIVE, DROPPED): The company introduced the Net Order Value (NOV) metric to provide better clarity on the difference between what customers pay and the stated MRP, especially in unbranded categories. (1 met, 1 dropped across 2 tracked commitments)
  > we are considering disclosing more data from next quarter onwards, which can help shareholders and investors understand the actual customer-paid AOV as well as the gross AOV that we are currently reporting.
- **[METRIC] Contribution Margin per Order** (POSITIVE, EXCEEDED): Food delivery margins reached an all-time high of 5.3% of NOV in Q2FY26, surpassing the 5% stabilization target. (1 exceeded, 4 met across 5 tracked commitments)
  > And in a few quarters from now on, we should get to that range we’re talking about, we’re not very far from that now.
- **[METRIC] Gross Merchandise Value (GMV) Growth** (POSITIVE, MET): Food delivery GOV grew by 21% YoY in Q2FY25, meeting the 20%+ target. (3 met, 2 missed across 5 tracked commitments)
  > And over time, as these markets get to the scale that we are at in Delhi NCR today, would mean that the business would have grown by 4x.
- **[METRIC] Monthly Transacting Users (MTU)** (NEUTRAL, IN_PROGRESS): Management noted that while food delivery GOV is currently 50-55% from Gold members, Blinkit is scaling rapidly with new store additions and SKU expansion to capture more wallet share. (1 in progress across 1 tracked commitment)
  > Should we, at some point, expect the Blinkit MTC’s to cross the Zomato MTC’s? Akshant Goyal: Absolutely. I think that seems like it will happen.
- **[PRINCIPLE] FDI Compliance and Marketplace Model Constraints** (POSITIVE, MET): The transition is progressing, with 80% already moved to the inventory model. The final 10% (to reach the 90% steady-state target) will remain seller-driven for operational reasons. (1 in progress, 2 met across 3 tracked commitments)
  > So, you also mentioned that the steady state proportion of in-sourcing will be about 90% rate inventory.
- **[PRINCIPLE] GMV vs Revenue Recognition** (POSITIVE, EXCEEDED): Consolidated Adjusted Revenue growth remained significantly above the 40% floor, clocking 58% YoY. (3 exceeded across 3 tracked commitments)
  > Sustained topline growth momentum with 58% YoY Adjusted Revenue growth, comfortably above the stated outlook of 40%+ YoY growth
- **[PRINCIPLE] Last-Mile Logistics Cost Structure** (POSITIVE, IN_PROGRESS): Management reported that delivery partner utilization is improving and idle time is coming down, which supports the goal of faster delivery timelines. (1 in progress across 1 tracked commitment)
  > We also believe that in some areas, there has been an unusual run-up, which we expect to normalize in the near term.
- **[PRINCIPLE] Unit Economics at Contribution Margin Level** (POSITIVE, MET): Profitability in food delivery actually improved during the quarter due to an unanticipated increase in platform fees, despite the earlier guidance of flat margins. (1 exceeded, 3 met, 1 missed across 5 tracked commitments)
  > Our attempt is to keep reinvesting back into the business to grow as fast as possible while maintaining neutrality on the EBITDA side - that's our strategy... it will not significantly deviate from our stated objective of remaining at least EBITDA neutral, if not positive.
- **[TREND] Market Consolidation Around Conglomerates** (NEUTRAL): Management intends to raise additional capital via QIP to strengthen the balance sheet against competitive pressures. — target: Fund raise via QIP
  > The fund raise is meant to strengthen our balance sheet at this point. ... we believe that we need to enhance our cash balance given the competitive landscape and the much larger scale of our business today.
- **[TREND] Quick Commerce Disruption** (POSITIVE, EXCEEDED): Management confirmed they reached the 1,000-store milestone ahead of the March 2025 schedule during the January 2025 call. (3 exceeded, 1 met, 1 revised across 5 tracked commitments)
  > Now with your plans to double the store count in the next 12 months, what is your expectation of how much time could these new stores take to reach contribution breakeven?
- **[TREND] Retail Media Advertising Monetization** (NEUTRAL): Blinkit expects advertising revenue to increase from current levels as a major driver of unit economics. — target: Increase from current levels
  > So yes, Samarth, broadly we expect the advertising revenue in Blinkit to increase from where we are today. But at this point, we don't want to give a guidance on where it can go.
- **[TREND] Value Commerce and Tier-2/3 Penetration** (NEUTRAL, IN_PROGRESS): Management confirmed that an incrementally larger portion of new store expansion is now happening in non-top eight markets. (1 in progress across 1 tracked commitment)
  > Looking forward over the next one year, a larger portion of our new stores will be in these smaller cities compared to what we saw last year.
- The District app was launched in November 2024, adhering to the four-week timeline provided in October. (5 met across 5 tracked commitments) (POSITIVE, MET)
  > Similarly, on the margin front, if you look at the last five to seven quarters, directionally, the EBITDA margins have improved from negative 9% in Q4 last year to negative 2% now, and we expect that change to continue.

### Business Model

- **[METRIC] Contribution Margin per Order (METRIC)** (POSITIVE, Change: EXPANDING): Blinkit's margin expansion has stalled due to intense competition in pricing, delivery fees, and real estate costs, despite maintaining market share. (1 stable, 2 expanding, 1 shifted)
  > And we are at -2% margin today in terms of Adjusted EBITDA as a percentage of NOV. So, we are not deep in red.
- **[METRIC] Gross Merchandise Value (GMV) Growth (METRIC)** (NEUTRAL, Change: STABLE): Growth slowed to 16% YoY this quarter, below the long-term 20% guidance, due to challenges in affordability and delivery timelines. (2 contracting, 1 expanding, 1 stable)
  > In the quarter, we have 16% year-over-year growth and you explained quite well as to what's driven that slowdown.
- **[METRIC] Order Frequency per Active Customer (METRIC)** (NEGATIVE, Change: CONTRACTING): Food delivery growth has slowed significantly to 13% YoY from 27% in the same period last year, attributed to lower ordering frequency and fewer app opens. (1 contracting)
  > our NOV growth has come down from, say, 27% year-on-year last year same quarter to 13% now. What would you attribute to be the major driver of this?
- **[METRIC] Average Order Value (AOV)** (POSITIVE, Change: EXPANDING): The segment is expanding rapidly following the acquisition of movie and event ticketing businesses, reaching an annualized NOV of INR 8,000 crore with 95% YoY growth. (1 expanding)
  > Going-out is now a INR 8,000 crore annualized NOV business... growing at 30%+ YoY [on a like-for-like basis].
- **[METRIC] Contribution Margin per Order** (POSITIVE, Change: EXPANDING): Food delivery growth has bottomed out and is showing a slow recovery with 14% YoY growth, while reaching an all-time high Adjusted EBITDA margin of 5.3% of NOV. (1 expanding)
  > Food delivery NOV grew 14% YoY, improving (slightly) from 13% YoY NOV growth in the previous quarter... Adjusted EBITDA margin (as a % of NOV) reached an all-time high of 5.3%
- **[METRIC] Gross Merchandise Value (GMV) Growth** (NEGATIVE, Change: CONTRACTING): Growth in food delivery has slowed to 13% YoY, below the previously expected 20% trend, due to a demand slowdown and seasonal factors affecting delivery partner availability. (1 contracting)
  > NOV growth in food delivery dipped to 13% YoY from 14%... I think the YoY growth is likely to bottom out now as we recover from the demand slowdown we started seeing in late 2024.
- **[PRINCIPLE] FDI Compliance and Marketplace Model Constraints** (POSITIVE, Change: EXPANDING): The company is officially transitioning from a marketplace to an inventory-ownership model over the next 2-3 quarters to gain margin leverage and better control over assortment. (3 shifted, 1 expanding)
  > First question is the move towards your inventory model... half of the 1% accretion has already happened. Should we expect the remaining half point to come in the next three to six months?
- **[PRINCIPLE] GMV vs Revenue Recognition** (POSITIVE, Change: SHIFTED): The transition to an inventory-led model is nearly complete, with 80% of NOV now coming from own inventory. This has fundamentally shifted how revenue is recognized (full value of goods vs commission). (1 shifted)
  > Transition to inventory ownership in quick commerce almost complete with ~80% of NOV in Q2FY26 on own inventory model
- **[PRINCIPLE] Last-Mile Logistics Cost Structure** (POSITIVE, Change: EXPANDING): The distribution moat is expanding with 243 net new stores added in the quarter, bringing the total to 1,544, with a target of 2,000 by December 2025. (3 expanding)
  > you'll open 3,500 to 4,000 stores and only then you'll achieve 100% YoY growth.
- **[TREND] Quick Commerce Disruption** (POSITIVE, Change: EXPANDING): Quick commerce has become the largest B2C business segment, with NOV growing 127% YoY and surpassing food delivery for the first time. Adjusted EBITDA losses reduced from -2.4% to -1.8% of NOV. (5 expanding across 1 engine)
  > My first question is on the quick commerce margins or losses, and congratulations on the breakeven there... your contribution margin expanded 90 basis points, EBITDA expanded about 130 basis points
- The segment saw a seasonal top-line decline, but continues to grow over 100% YoY as the company invests in transitioning customers to the new District app. (2 expanding, 1 stable, 1 shifted across 2 engines) (NEGATIVE, Change: SHIFTED)
  > As of now, as we have mentioned, we expect year-on-year growth to continue slowly trending up towards 20% YoY, is what our current sense on the market is.

### Future Growth

- **[METRIC] Contribution Margin per Order** (NEGATIVE, Trend: DECELERATING): Management indicates that adjusted EBITDA margins are on an upward trajectory and expects them to continue increasing from current levels. (2 accelerating, 2 decelerating, 1 new trend across 5 signals)
  > your contribution margin expanded 90 basis points, EBITDA expanded about 130 basis points, and all of this is while you say that the competition is irrational.
- **[METRIC] Gross Merchandise Value (GMV) Growth** (NEGATIVE, Trend: DECELERATING): Food delivery Gross Order Value (GOV) growth is accelerating, moving from 14% YoY in Q1FY24 to 27% YoY in Q1FY25. (2 accelerating, 3 decelerating across 5 signals)
  > Food delivery GOV grew 27% YoY (10% QoQ)... we remain on track to getting to 4-5% Adjusted EBITDA margin
- **[METRIC] Monthly Transacting Users (MTU)** (POSITIVE, Trend: STEADY): Monthly Transacting Users (MTU/MTC) in food delivery are growing at a steady 10% YoY, while overall Gross Order Value (GOV) is guided to grow at 20%+, driven by a mix of user growth and order volume. (1 steady across 1 signal)
  > on the food delivery side, the ATC’s have grown by about 10% YoY... as the business GOV continues to grow 20%+ (which we have guided on)
- **[METRIC] Order Frequency per Active Customer** (POSITIVE, Trend: STEADY): Throughput per store is expected to increase over time as the company optimizes existing locations and improves service quality, though expansion timing remains 'lumpy'. (1 steady across 1 signal)
  > directionally, we expect the average throughput per store to continue to increase over time.
- **[PRINCIPLE] FDI Compliance and Marketplace Model Constraints** (POSITIVE, Trend: NEW_TREND): The company is initiating a structural shift from a marketplace to an inventory-led model in quick commerce to capture an additional 1% margin, marking a new strategic direction. (4 new trend, 1 steady across 5 signals)
  > the full benefit should accrue in the next six to nine months, and the benefit will not be more than 1%.
- **[PRINCIPLE] GMV vs Revenue Recognition** (POSITIVE, Trend: STEADY): The transition to an inventory-led model in quick commerce is nearly complete at 80% of NOV, with management expecting a steady state of 90% and a 1% net margin expansion over the next 4-6 quarters. (1 steady across 1 signal)
  > Transition to inventory ownership in quick commerce almost complete with ~80% of NOV in Q2FY26 on own inventory model... expected to go to a steady state number of about 90% in the next quarter.
- **[PRINCIPLE] Last-Mile Logistics Cost Structure** (POSITIVE, Trend: ACCELERATING): The company is steadily densifying its network, particularly in the top 8 cities, to reduce delivery costs and improve service levels. (1 steady, 1 accelerating across 2 signals, 1 leading indicator)
  > we are investing a lot more in automation now... our store size is going up every quarter.
- **[PRINCIPLE] Unit Economics at Contribution Margin Level** (NEGATIVE, Trend: DECELERATING): While mature stores show high margins (6.4%), overall profitability is temporarily decelerating as the company front-loads investments into new, underutilized stores. (1 decelerating across 1 signal)
  > investments into newer stores, which have lower utilization compared to others, are leading to reduced profitability at an aggregate level. This trend, as we have stated, is likely to continue as we accelerate the pace of new store additions.
- **[TREND] Market Consolidation Around Conglomerates** (NEUTRAL): Aggressive competition is a major risk, forcing the company to occasionally lower delivery fees and increase discounts to protect its market share. — Competitive Intensity: Store throughput down 6% QoQ
  > we saw competitive intensity getting amped up because a lot of competitors went to low MOVs for zero delivery fees
- **[TREND] Quick Commerce Disruption** (POSITIVE, Trend: ACCELERATING): The company is shifting from a 'slow expansion' phase to an 'aggressive' rollout, planning to double the Blinkit store count within 12 months. Long-term potential is cited at 500 stores per major metro. (5 accelerating across 5 signals, 1 leading indicator)
  > it's only then you'll open 3,500 to 4,000 stores and only then you'll achieve 100% YoY growth.
- Food delivery growth is showing signs of a broad-based slowdown in the most recent period, though management views this as a temporary macro-economic trend. (1 decelerating, 4 new trend across 5 signals, 2 leading indicators) (POSITIVE, Trend: NEW_TREND)
  > we expect year-on-year growth to continue slowly trending up towards 20% YoY, is what our current sense on the market is.

### Risk Assessment

- **[CATALYST] Government Intervention on Delivery Timelines** (NEUTRAL, Risk: MODERATE): The risk is currently stable/insufficiently clear as the rules are not yet operationalized. Management believes they can either absorb the costs or pass them to customers once notified. (1 stable)
  > One is the impact because of the gig worker cost going up towards their social security benefits, and secondly because of the changes on the gratuity side for some of the fixed term contract labor... the business will either be able to absorb that cost or we'll pass it on to customers.
- **[CATALYST] GST E-Commerce Operator Compliance** (NEGATIVE, Risk: MODERATE): The risk has intensified as the company is now facing active demand orders and Show Cause Notices (SCNs) from GST authorities totaling over INR 441 crore related to delivery charges. (2 intensifying, 1 easing)
  > GST cuts bring down basket pricing by 3%, and this should help in higher demand... some of it did, but there were also supply challenges because of the transition.
- **[METRIC] Average Order Value (AOV)** (POSITIVE): Store productivity (NOV per day per store) has stabilized at INR 734k, showing a slight recovery from the previous quarter's dip, though still below Q2FY25 peaks. (1 easing, 1 stable)
  > Average NOV per day, per store (INR '000): Q3FY25 (749), Q4FY25 (736), Q1FY26 (734).
- **[METRIC] Contribution Margin per Order** (NEGATIVE): Losses in the 'Others' segment (including new initiatives like Bistro and B2B experiments) jumped significantly to INR 16 crore from INR 1 crore. The 'Going-out' segment remains in an investment phase with negative margins as it transitions to the new 'District' app. (2 intensifying, 1 stable)
  > I do see in EBITDA, there is an ‘Others’ where losses suddenly became INR 16 crore versus close to INR 1 crore-odd number in last quarter... all of our new initiatives, whether it is Bistro, Nugget, other B2B businesses... all of that cost or losses are reflecting in the ‘Others’ segment.
- **[METRIC] Monthly Transacting Users (MTU)** (NEUTRAL): Management notes that while they are seeing a big increase in Monthly Transacting Users (MTU), the mix is shifting toward general merchandise. This is causing the Net Order Value (NOV) to become a smaller percentage of Gross Order Value (GOV). (1 stable)
  > as the share of general merchandise and non-branded products on the platform grows... NOV is a smaller and smaller percentage of GOV
- **[METRIC] Order Frequency per Active Customer** (POSITIVE, Risk: MODERATE): The risk is stable to easing; while category-specific frequency isn't disclosed, overall Monthly Transacting Users (MTU) are growing and management notes that mature markets like Delhi are growing at 70% YoY, suggesting high stickiness. (1 easing, 1 stable)
  > On store throughput, Manish, it's a function of the fact that our assortment is now expanding and it's possible therefore that there are quarters when some of the store expansion, the driver of which is assortment expansion is not as fast moving as some of the main SKUs.
- **[PRINCIPLE] FDI Compliance and Marketplace Model Constraints** (POSITIVE): Management is seeking shareholder approval to move toward an inventory-led model for certain categories. This is expected to increase inventory days on the balance sheet from 15-16 days to potentially 20-25 days. (1 intensifying, 2 stable, 2 easing)
  > there's definitely a chance that the number of inventory days on books will go up as a result... if the share of these categories where inventory moves slowly, increases, of course, the inventory days will increase.
- **[PRINCIPLE] Last-Mile Logistics Cost Structure** (NEGATIVE, Risk: MODERATE): A temporary shortage of last-mile workers is impacting food delivery, compounded by rapid e-commerce expansion. While not a regulatory change yet, the supply-demand mismatch is creating short-term pressure on the delivery fleet. (3 intensifying, 1 emerging)
  > especially on capex, it will go up on a per store basis going forward because there's a lot of automation opportunity here which will increase productivity.
- **[PRINCIPLE] Unit Economics at Contribution Margin Level** (NEGATIVE): Losses in the 'Going-out' (District) segment have persisted, with Adjusted EBITDA declining to negative INR 54 crore in Q1FY26 from negative INR 47 crore in Q4FY25. (1 intensifying)
  > Going-out Adjusted EBITDA: Q4FY25 (-47), Q1FY26 (-54).
- **[TREND] Quick Commerce Disruption** (NEGATIVE, Risk: HIGH): Competition remains at peak levels, preventing expected margin expansion. Management notes aggression in discounting, marketing, and free delivery from both existing and new players. (3 intensifying, 2 stable, 1 high-severity)
  > Now you're saying that the 100% YoY growth is contingent upon competition not staying irrational... Last quarter, we saw competitive intensity getting amped up because a lot of competitors went to low MOVs for zero delivery fees, but we're also seeing a lot of discounting happen in the market.
- **[TREND] Value Commerce and Tier-2/3 Penetration** (NEUTRAL): Real estate costs are facing upward pressure due to significant competition for the same locations in major cities. Store rollout remains elevated at 300 stores per quarter. (1 stable)
  > There has been significant competition for the same real estate in most of the cities that we are in... anything you pick up, whether it is pressure on real estate costs, marketing cost, incentives, etc. all of that continues to peak.
- Losses appear to have stabilized in the INR 50-60 crore range per quarter. While absolute losses are expected to remain 'range bound' in the near term, management expects the business to improve in FY27. (2 stable) (NEUTRAL, Risk: MODERATE)
  > Our previous thought process was that the losses in that business will be around INR 60 crore to INR 70 crore maybe, quarter wise. There has been a sudden jump in this particular quarter... We decided to launch District Pass membership program which we initially did not plan for in this quarter, and

### Scenario Analysis

- No significant impacts identified (NEUTRAL)
- 3 positive impacts identified; 1 negative impact identified (POSITIVE)
  > It's largely operating leverage, which is resulting in lower costs and higher productivity in warehouses that's resulting in increase in margins... especially on capex, it will go up on a per store basis going forward because there's a lot of automation opportunity here which will increase productiv

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