Key Financial and Operational Updates

Food Delivery Business Performance:

  • Competitive intensity in food delivery was higher in Q2FY27 compared to previous quarters, partly driven by Zomato's own aggressive growth investments
  • Company has consistently increased investment levels over recent quarters in both new customer acquisition and driving frequency of existing customer base
  • This trend of increased investment is expected to continue
  • Management expects food delivery margins to remain broadly flattish over the next 1-2 years

Quick Commerce (Blinkit) Expansion:

  • Company plans aggressive store expansion with bulk of new stores focused on tier 2 and tier 3 cities
  • Expansion confidence driven by excellent payback outcomes in these markets and less competitive intensity
  • Economics in tier 2 markets described as "pretty robust" with "extremely good" paybacks
  • Mature cities (operating for 2-3+ years) show strong performance with over 70% of NOV being EBITDA positive
  • Current NOV per store is approximately ₹9 lakh per day, with guidance that steady state could reach ₹11 lakh per day per store
  • Store expansion is starting in OND quarter (October-November-December) and is not expected to impact short-term margins

Growth Outlook:

  • Management maintains $1 billion Adjusted EBITDA guidance for FY29
  • Expects quick commerce growth to accelerate starting December quarter (Q3FY27) on YoY basis
  • In larger cities, Blinkit MTU is already multiple times that of Zomato with no plateau yet visible
  • Directionally, percentage of NOV from top 8 cities is reducing as expansion focuses on smaller cities

dark.ai Product Disclosure:

  • New privacy-focused LLM product for power users, currently in development for about a year
  • Product is part of Eternal Limited and costs are accounted for in 'Others' segment
  • Not yet monetized with costs described as "not very meaningful at this stage"
  • Base case expectation: high gross margin business that could fund itself and reach profitability quickly
  • If successful, could require significant investment in hardware/compute (GPUs) for scaling
  • Described as a "zero-to-one bet" that could become a global business if successful
  • Product uses open-source models with fine-tuning and application layer built on top

Operational Metrics:

  • Quick commerce store count has grown by almost 50% YoY
  • NOV per day and orders per day per dark store grew 16-17% despite store expansion
  • Company uses blended capex guidance of ₹2.5 crore per store for expansion, including tier 2/3 cities
  • Gross profit and contribution margins affected by multiple factors including store size increases, product mix, and investment in new stores

Competitive Landscape:

  • Management notes competitive intensity in quick commerce significantly increased over last 12 months with market becoming 5-7 players
  • After 12 months of heightened competition, management states they now have "better read on competition" and feel more confident about reaccelerating expansion
  • Describes competition as "more predictable now"

Agentic Commerce:

  • Company is experimenting with agentic commerce interfaces but adoption in India is described as "close to zero"
  • Current approach is "friendly to the traffic" to learn and experiment
  • No current plans to block agent traffic as there is no "nuisance traffic" causing problems
  • Traffic from AI agents is currently negligible

Management Commentary Highlights

Investment Philosophy:

  • Company prioritizing absolute Adjusted EBITDA profit growth over percentage margin optimization
  • Focus on driving more growth through investment rather than margin optimization
  • Balance sheet strength allows investment in new opportunities demonstrating long-term return on capital

Expansion Strategy:

  • Tier 2/3 expansion provides both robust economics and first-mover advantage for market share capture
  • Assortment in expansion cities is a subset of metro offerings with different product mix patterns
  • As supply chain scales, company can add more SKUs at lower incremental cost

Future Outlook:

  • Next 12 months expected to determine whether AI initiatives (including dark.ai and Nugget) become meaningful
  • These represent potential "multibillion-dollar market cap outcomes" if successful
  • Company focusing on opportunities where they have unique capabilities or insights