Zomato shares hit 52-week high as investors pin hopes on Blinkit expansion plan buzz

Food services firm Zomato’s shares registered a 52-week high on Monday after reports suggested the company had bought warehouses in New Delhi and Mumbai for a planned expansion of its Blinkit business. The Zomato stock strengthened by as much as Rs 3.7, or 2.4 per cent, to Rs 160.4 apiece on BSE, surpassing an existing 52-week peak scaled on Friday.

Analysts say expansion of the company's e-commerce business will make it more competitive and result in direct competition from big players like Amazon and Flipkart.

Reports also suggested that Zomato plans an integration of various categories and brands for the planned expansion of Blinkit.

According to Zee Business research, the direct-to-consumer (D2C) space will emerge as the long-term growth trigger for Zomato.

Blinkit enjoys a higher user traffic growth than its quick commerce peers, and in January, Zomato’s overall Android traffic grew 14 per cent on a year-on-year basis, according to the research.

The management has already given strong guidance for Blinkit, with Zomato CEO Deepinder Goyal confident that Blinkig will drive more value for Zomato shareholders in the next 10 years.

Blinkit registered a more than two-fold increase in gross order value (GOV) to Rs 3,542crore in the December quarter.

Also, Blinkit's operating margin is likely to improve going ahead with adjusted EBITDA turning break-even by Q1FY25, according to Zee Business research.