Understanding the Stock Price Surge of Zomato and Blinkit: Top 5 Insights from Q1 FY26 Shareholder's Letter

Join me, CA Rachana Ranade, as we dive into the shareholders letter of Blinkit and uncover top takeaways from their latest financial results, including surprise insights on why the stock price may have gone up despite declining profitability.

  • Here are the 22 clean bullet points summarizing the video:
  • * CA Rachana Ranade welcomes viewers to a video discussing Zomato's shareholders letter
  • * The stock price has gone up by 20% despite poor PAT (profit after tax) results, down by almost 90%
  • Shareholders Letter - Key Points
  • 1. Business performance in Q1 FY26: Net order value (NOV) of the B2C business grew by 55% YoY and 16% QoQ to ₹20,183 crores.
  • 2. Quick commerce NOV exceeding food delivery NOV: A first-quarter achievement, indicating strong growth in quick commerce.
  • 3. Food delivery business guidance: The company expects the business to grow north of 15% YoY, trending towards 20% YoY in FY27.
  • 4. New store openings: Blinkit added 243 net new stores in Q1, taking the total count to 1,544 stores by end of the quarter.
  • 5. Target of 2,000 stores by December 2025: The company has brought forward its target from December 2026 to December 2025.
  • 6. Long-term profitability not a concern: Despite investments in infrastructure and high competition, the company believes long-term profitability is not a concern.
  • 7. Marginal guidance: The company expects to see 1 percentage point margin increase over time as it transitions from a marketplace model to inventory ownership.
  • Inventory Ownership Model
  • 8. Transition to inventory ownership model: Blinkit will transition from a marketplace model to an inventory ownership model in the next two to three quarters, leading to increased profitability.
  • 9. ROC guidance: The company expects ROC (return on capital) to be at least 40% when it achieves an adjusted EBITDA margin of 5-6%.
  • 10. Stock's all-time high: The stock hit an all-time high of ₹304.70 on December 9, 2024.
  • 11. Consolidation and potential cup-and-handle pattern: The stock has consolidated after the all-time high and may form a cup-and-handle pattern.
  • 12. High PE: The stock's PE (price-to-earnings) ratio is high at 953, making it vulnerable to market corrections.
  • 13. Market cracking: If the market starts to crack, stocks with high PE ratios like Blinkit are likely to correct first.
  • Let me know if you need anything else!

Source: CA Rachana Phadke Ranade via YouTube

❓ What do you think? What underlying factors could be driving the disconnect between Zomato's poor PAT results and its 20% stock price increase, beyond just management guidance? Feel free to share your thoughts in the comments!