Mnogo Lososya, which was recently acquired by Russia's largest retailer and e-grocer X5 Retail Group, will be launching its dark kitchen format in 20 locations in Saint Petersburg, operating under four brands (Mnogo Lososya, Ten Ideal Pizzas, Rolls No. 1, YAJI).

The delivery from new dark kitchens will be performed by Okolo (X5's own aggregator), as well as by Yandex.Eats and Delivery Club. 

As reported by bne IntelliNews, in 2020 X5 had a strong head start on digital innovation and used its advantage to emerge as the largest e-grocer amid the coronavirus (COVID-19) lockdown.

"Rolling out the dark kitchen format in St Pete could provide a significant growth pillar for the respective segment and is likely a pilot for the potential roll-out in other large cities (1mn+ population)," VTB Capital (VTBC) commented on June 16.

In addition, X5 announced that it aims to separate its e-grocery channel into a different format and is considering strategic partnerships, either with other retailers or with existing online players. 

The group was previously determined to IPO its e-grocery and express delivery assets. But it now appears that X5 could be moving to a service ecosystem model, as previously it said it would develop its own FinTech services, media platform and buy into the dark-kitchen segment.

VTBC also believe that X5 is moving closer to an ecosystem model, with an extended number of products to clients, complementing its core food retail with new core ecosystem attributes, such as a media platform, FMCG marketplace and delivery aggregator, as well as payment and subscription services. 

In VTBC's model, online sales reach 8% of the total of X5 by 2025, accounting for RUB227bn ($3.15bn) and increasing at a compounded annual rate of 62% in 2021-2025.

VTBC analysts affirm a Buy rating on X5 shares, while noting that X5’s global depository receipts (GDRs) are down 12% year to date and with a demand 2021 forecasted Enterprise Value/EBITDA of 5.6x, with a 12-month dividend yield of 8%, which is seen as appealing.