Blinkit, Instamart face rising competition, elusive profitability in Q4

The post-results commentary from Zomato parent Eternal as well as from Swiggy had a common denominator: both companies pointed at heightened competition in the quick commerce space. Although Eternal’s Blinkit held on to its lead over Swiggy’s Instamart, financial results for the March quarter showed both quick delivery platforms struggling to turn profitable.

Adjusted Ebitda margin as a share of Gross Order Value (GOV)—a measure of profitability—for Eternal’s quick commerce operations dropped to -1.9% in the three months to March 31, from -0.9% a year ago and -1.3% in the previous quarter.

For Swiggy, the adjusted Ebitda margin for the quick commerce segment was -18% for the March quarter, against -13.2% in the year-ago period and -14.8% in the December quarter.

Network expansion reflects in profits

Both Eternal and Swiggy made aggressive investments in their quick commerce businesses during the last quarter to expand their networks as existing and new rivals upped the ante.

Blinkit posted its highest-ever net store addition at 294 and is on track to become a 200-store network by December. Instamart added 316 dark stores to meet the 1,000-store target it had set for March 2025.

This was reflected in the segmental results the quick commerce players put out for the fourth quarter of fiscal year 2025: Eternal’s quick commerce arm had an adjusted Ebitda loss of Rs 178 crore, compared with an adjusted Ebitda loss of Rs 37 crore last year and Rs 103 crore in the previous quarter. For Swiggy, the adjusted Ebitda loss during the period under review was Rs 840 crore, widening from Rs 307 crore in the year-ago period and Rs 578 crore in the previous quarter.

Blinkit’s margin expansion under pressure

The impact of competition has been seen in the lack of significant margin expansion as expected, said Blinkit Chief Executive Officer (CEO) Albinder Dhindsa, even as take rates and contribution margins remain stable sequentially. Take rate refers to the commission or fees that aggregators like Zomato or Swiggy charge for delivering food from a restaurant, which they keep as revenue.

“There are now more players in the market, and there is obviously more competition across categories to market to the same set of customers, which is leading to some margin pressure, both in terms of being able to charge higher delivery fees in some geographies and also in being able to sell more of the higher-margin categories on the platform,” Dhindsa told analysts in a post-earnings call.

The company is expecting healthy dividends from its aggressive expansion into tier-2 and tier-3 cities, the Blinkit CEO said.

Margins are likely to remain under stress, at least in the near term, analysts believe. Losses will increase or decrease in the near future depending on how the pace of expansion and competitive intensity play out over the next few quarters, according to analysts at Kotak Institutional Equities.

Brokerage house Motilal Oswal Financial Services said its profitability estimates for Blinkit are delayed even further, with a breakeven expected only in fiscal year 2027.

Instamart playing catch-up

Instamart is lagging behind its largest peer, Blinkit, going by the numbers and what analysts say. Swiggy has spent big on its quick commerce unit to expand its darkstore footprint and gain market share amid intensifying competition. However, Blinkit remains the dominant force in the quick commerce space with a bigger market share, larger store network, and markedly less cash burn.

While Swiggy reported higher revenue growth than Zomato in food delivery, Blinkit continues to grow at a faster rate than Instamart despite being twice its size, noted brokerage house Nuvama.

Swiggy CEO Sriharsha Majety said that adjusted Ebitda losses for the quick commerce vertical have peaked, and Instamart will progressively unwind losses. However, the company revised the contribution margin breakeven deadline to three to five quarters, from three quarters earlier.

Analysts at Motilal Oswal flagged irrational competition and cash burn intensity at Instamart as a reason for caution. To put things in perspective, adjusted Ebitda loss levels show that while Blinkit lost Rs 2 for every Rs 100 of Gross Order Value (GOV), Instamart lost Rs 18.

Also Read: Swiggy Instamart delivers 101% YoY growth in Q4 GOV

Zomato’s loss, Swiggy’s gain?

Earlier this month, Zomato bowed out of the quick food delivery space, while Swiggy doubled down on it.

Announcing its March quarter results, Eternal confirmed that it has closed its 15-minute food delivery platform, Quick, and homely meal service Everyday. The services were closed as the infrastructure is not mature enough to ensure consistent service quality under Quick, and Everyday did not “move the needle” for the food delivery business, the Eternal management told analysts in a post-earnings call.

But Swiggy has pinned its hopes on its 10-minute food delivery service Bolt driving growth and market share for the overall vertical. “New users acquired through Bolt have shown 4–6% higher monthly retention than the platform average,” the company said.

Also Read: Quick commerce price war: Rivals offering steep discounts to capture market, says Swiggy CFO