Zomato has already lost approximately 1% in revenue from its grocery delivery business Blinkit and around 0.15% of consolidated revenue for the first quarter (Q1) of FY24, brokerage firm ICICI Securities has said in a research note.

This comes in the wake of recent protests in the Delhi-NCR region by Blinkit workers against a change in their payout structure, which they claim will lower their earnings.

The protests, which are expected to continue, have already resulted in more than 100 Blinkit dark stores shutting down.

“We estimate Blinkit was operating ~370 dark stores pan-India as of Q3FY23. This implies ~25% of the dark stores are currently not operational. Given that at least 3-4 days’ sales have already been lost, this implies a ~1% loss in revenue from Blinkit and ~0.15% of consolidated revenue for Q1FY24 – already,” read the note.

The research note added that the tweak in payout structure would help Zomato rein in costs. “We think the change in delivery fee structure indicates Zomato’s efforts towards cost control. In our view, this would allow Blinkit to increase the delivery radius for its existing dark stores and thus improve its network coverage with limited capex spends.”

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Despite the protests, Blinkit is going ahead with its plan to roll out the changed payout structure across more stores.“The company had anticipated disruptions prior to the rollout of the new structure from Monday. It is trying to educate delivery executives about the benefits. Blinkit executives have been in the field talking to protesting workers,” a company executive had told ET.

Expected earnings

The research note added that although strikes and agitations are unavoidable in this sector given the large exposure to an urban ‘blue-collared’ workforce, Blinkit needed to resolve the issue at the earliest.

“Given that the strike (at Blinkit) is happening in the national capital and has already garnered political attention, we think the company should try to resolve the issue at the earliest. This could be through a combination of clearer communication on the expected change in earnings for delivery executives and/or some concessions on the delivery fee,” it suggested.

The brokerage firm maintained a buy call on Zomato’s stock at Rs 54, with a target price of Rs 65, but expects Zomato’s food gross order value (GOV) to remain flat sequentially in the Q4FY23 earnings, despite the restart of Zomato Gold.

“We estimate a 1% quarter-on-quarter (QoQ) decline in food ordering average order value (AOV) as delivery fees have been waived for Gold members and a stable food ordering contribution margin (QoQ) as restaurant take rate improvements may offset delivery subsidy increases,” it said.

Also, it estimates Hyperpure, Zomato’s B2B restaurant supplies business, to grow 26% QoQ and Blinkit to grow 30% QoQ, riding on an increase in geographical reach.

“Overall, we estimate adjusted revenue growth of 9.5% QoQ and 68% YoY and flattish consolidated EBITDA QoQ in Q4FY23E.”

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