1. What do you think of the number of food delivery orders increasing as the disposable incomes rise?
2. What about the fact that the middle-class is increasing in size- how fast do you see the 1.7 cr families increasing in size?
On the quick delivery of groceries business- I think there will be consolidation in the segment and that is when either Zomato will sell out and hopefully earn cash; or be an acquirer to turn Blinkit into a profit making entity.
A high risk investment if one were to make it, but may work out in the long term as people look to outsource day to day activities.
1. Regarding food orders going up, there is scope for growth with rise of disposable incomes. Like I said, there is upper cap to what zomato can charge end users. The elasticity of price/demand is untested as it is still loss making division. So, profits Zomato can earn is untested. I also dont see operating leverage considering lot of variable costs.
2. Even if middle class grows and 1.7 families increase, this 1.7 cr families are top end of pyramid. If Zomato could not make profit from them, then whom do we expect them to make money from?
3. Blinkit may work out. But as of now untested and still loss making. When it starts performing, then we can give value to it.
Thanks Ramu!
Couple of questions:
1. What do you think of the number of food delivery orders increasing as the disposable incomes rise?
2. What about the fact that the middle-class is increasing in size- how fast do you see the 1.7 cr families increasing in size?
On the quick delivery of groceries business- I think there will be consolidation in the segment and that is when either Zomato will sell out and hopefully earn cash; or be an acquirer to turn Blinkit into a profit making entity.
A high risk investment if one were to make it, but may work out in the long term as people look to outsource day to day activities.
1. Regarding food orders going up, there is scope for growth with rise of disposable incomes. Like I said, there is upper cap to what zomato can charge end users. The elasticity of price/demand is untested as it is still loss making division. So, profits Zomato can earn is untested. I also dont see operating leverage considering lot of variable costs.
2. Even if middle class grows and 1.7 families increase, this 1.7 cr families are top end of pyramid. If Zomato could not make profit from them, then whom do we expect them to make money from?
3. Blinkit may work out. But as of now untested and still loss making. When it starts performing, then we can give value to it.
Very good article. keep it up.. I agree that InfoEdge is a much much better investment opportunity than Zomato.
Very detailed explanation sir, thankyou very much for writing, I loved it...
Very nicely explained, Thank you Sir. Sir, how we can contact you?
Thank you for your kind words! You can reach me at rcgupta@budgetiger.in