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Jayant Mundhra
•
Dexter Capital Advisors • 1y
#Deepdive: Zepto’s soaring valuation is driven by its meat biz 💰🚀 Strange that hardly anyone’s talking about it. No doubt, most people don’t get it. So, let’s deep-dive and break down! .. Zepto was recently valued at $3.6bn (though the pre-money valuation was $3bn). But, this included its private-label meat brand called Relish! And what’s special about it? Four things! .. 1️⃣ Relish has hit an annual revenue run rate of Rs 500cr. -> That’s very close to Rs 850cr run rate of standalone meat delivery unicorn startup, Licious -> Licious was last valued at $1.5bn and is the de facto leader in this space on a pan-India basis -> But, Licious operates in 20+ cities! Zepto is present in just 10 and hasn’t even launched Relish in all of them Thus, Zepto has definitely trumped Licious to become the market leader in many of the 10 cities, where Zepto operates 🙌🙌 .. 2️⃣ When Zepto raised money before this, there was no Relish! Zepto last raised a round in August 2023 at $1.4bn valuation (post-money). And Relish was launched months later, around December 😅😅 Thus, Relish has added a massive chunk of the valuation here! .. 3️⃣ What helps? Relish is a very high-margin business. Plus, it amps up the average order values significantly. Hence, it not only brings in money on its own but also makes the whole of the unit economics per order better! .. 4️⃣ Just 7 months! -> If Zepto could launch and scale a new business to such a massive scale in just 7 months, what happens when it launches more of such niche brands? -> The sales, margins and overall unit economics could improve dramatically! Thus, the founders (Aadit, Kaivalya) have displayed solid execution here 🙌🙌 And that’s what led to the big valuation jump. .. Mind it, the impact of Relish’s sky-rocketing pace is already visible. Licious, as per various media reports has not grown in the last 12 months and has been stagnant. And that is largely about the entry of Zepto, which ate away all the growth. Speaks volumes. What do you think?
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