India’s listed quick commerce players — Zomato’s Blinkit and Swiggy Instamart — are expected to see solid growth in order volumes and store expansions in the fourth quarter of FY25, but their profitability timelines may stretch further, analysts at JP Morgan have said.
The brokerage has slightly revised estimates, pushing out the Ebitda break-even timeline to Q3FY26 from Q2FY26, as contraction in contribution margin may offset gains from increasing orders.
“A combination of falling network age and rising cities served from distant warehouses should be counterbalanced by moderating subsidies and rising availability and basket sizes. This should result in a one-quarter push out in QC profitability for both platforms,” analysts Ankur Rudra and Bhavik Mehta said in the note.
However, they said that subsidies are starting to moderate, and average order values (AOVs) are improving with larger basket sizes. They also expect addition of nearly 300 new dark stores for each player.
For food delivery, JP Morgan expects a slight 2.5% quarter-on-quarter dip in gross order value (GOV) for Zomato and a 1% drop for Swiggy due to seasonal softness, while contribution margins are expected to rise 20 basis points for both. The moderation in food delivery GOV estimates, coupled with delayed Ebitda break-even for quick commerce, will likely drives overall 2-18% Ebitda cuts over FY25-27 for Zoamto, it said.
In quick commerce, they expect Blinkit GOV to rise by 29.5% quarter-on-quarter, while Instamart GOV is expected to jump 33% in Q4. However, contribution margins are expected to dip 20 basis points to 2.8% for Blinkit and a much steeper 330 basis points to 7.9% for Instamart.
While most quick commerce players are burning cash to capture market share, Blinkit has clearly pulled ahead in the race, with faster growth and aggressive expansion of its dark store footprint. While this has come at the cost of higher losses in Q3, its scale and revenue momentum have helped it capture the highest market share.
Meanwhile, Swiggy Instamart has grown steadily but is showing signs of margin strain, largely due to faster expansion and competitive discounting. Swiggy noted in its Q3 earnings that growth investments in quick commerce led to a reduction in contribution margin from (-)1.9% in Q2FY25 to (-) 4.6% in the third quarter.