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Eternal Ltd, formerly known as Zomato, has released its first-quarter results for fiscal year 2025-26, revealing a complex financial picture. While the company experienced a significant surge in revenue, fueled primarily by its quick commerce arm, Blinkit, its profit after tax (PAT) witnessed a dramatic decline compared to the previous year. This divergence highlights the challenges and opportunities within the evolving landscape of online food delivery and quick commerce in India. The 90% year-on-year drop in PAT, from Rs 253 crore to Rs 25 crore, is a stark contrast to the impressive 70.4% increase in revenue from operations, which rose to Rs 7,167 crore. This indicates that while the company is successfully expanding its market presence and attracting more customers, it is also facing increased costs and potentially lower margins. The stock market reacted positively to the revenue growth, with Eternal's shares climbing as much as 7.5%, demonstrating investor confidence in the company's long-term potential, particularly in the quick commerce sector. However, the underlying profit decline warrants a closer examination of the factors contributing to this discrepancy. The re-branding from Zomato to Eternal in March signals a strategic shift towards a broader portfolio of services beyond just food delivery, encompassing quick commerce and other related ventures. This diversification is likely aimed at capturing a larger share of the overall consumer market and mitigating the risks associated with relying solely on food delivery. The company's strong cash balance of Rs 18,857 crore provides a solid foundation for future investments and strategic initiatives. A deeper dive into the performance of each of Eternal's key business segments reveals the specific drivers behind the overall financial results. The food delivery business, which was once the company's primary focus, experienced a more modest growth rate compared to Blinkit. Adjusted revenue for food delivery increased by 17.7% YoY to Rs 2,657 crore, indicating a slowdown in demand compared to the rapid growth seen in previous years. The gross order value (GOV) for food delivery also increased, but at a slower pace than Blinkit, rising 10% from the previous quarter to Rs 10,769 crore. The increase in average monthly transacting customers (MTCs) to 22.9 million suggests that the company is still attracting new users to its food delivery platform, but the growth rate is not as high as in the past. This slowdown could be attributed to factors such as increased competition from other food delivery platforms, changing consumer preferences, and the impact of macroeconomic conditions on consumer spending. In contrast, Blinkit, Eternal's quick commerce arm, is experiencing rapid growth and is becoming a significant contributor to the company's overall revenue. Blinkit's revenue surged by 155% YoY to Rs 2,400 crore, demonstrating the increasing popularity of quick commerce among consumers. The GOV for Blinkit also increased dramatically, reaching Rs 11,821 crore in the June quarter. This rapid growth is being fueled by the company's aggressive expansion of its dark store network, which increased from 639 last year to 1,544 in the current quarter. However, this expansion is also contributing to the company's losses in the quick commerce segment. Blinkit reported an EBITDA loss of Rs 162 crore in Q1FY26, compared to a loss of Rs 3 crore in the same period last year. This indicates that while Blinkit is rapidly growing its revenue, it is also incurring significant costs associated with building out its infrastructure and acquiring new customers. The average order value (AOV) for Blinkit remained relatively flat sequentially at Rs 669, suggesting that the company is focused on driving order volume rather than increasing the value of each order. The increase in average monthly transacting users to 16.9 million demonstrates the growing appeal of Blinkit's quick commerce services to a wider range of consumers. The decline in revenue for Eternal's Going Out business is a concerning trend, as this segment is supposed to complement the food delivery business by offering a broader range of dining experiences. The almost 10% YoY decrease in revenue to Rs 207 crore suggests that the company is facing challenges in attracting customers to its Going Out platform. The increase in GOV for the business, however, indicates that customers who are using the platform are spending more money. Eternal's business-to-business (B2B) supplies vertical, Hyperpure, is performing well, with revenue rising 89% YoY to Rs 2,295 crore. This suggests that the company is successfully leveraging its existing relationships with restaurants and other food service providers to expand its B2B business. Overall, Eternal's Q1FY26 results present a mixed picture. While the company is experiencing strong revenue growth, particularly in its quick commerce segment, it is also facing challenges in maintaining profitability and growing its food delivery business at the same pace as before. The company's strategic focus on diversifying its business and expanding its quick commerce operations appears to be paying off, but it needs to address the challenges in its Going Out business and improve the profitability of its Blinkit operations to ensure long-term sustainable growth. The expansion of Blinkit's dark store network, while driving revenue growth, is also contributing to increased losses. Eternal needs to carefully manage its investments in Blinkit to ensure that it can achieve profitability in the long run. The company's strong cash balance provides a buffer, but it needs to be used wisely to fund strategic initiatives and improve the overall financial performance of the business. The future success of Eternal will depend on its ability to successfully navigate the evolving landscape of online food delivery and quick commerce in India, adapt to changing consumer preferences, and effectively manage its costs. Investors will be closely watching the company's performance in the coming quarters to see if it can maintain its revenue growth momentum while also improving its profitability. The company's ability to execute its strategic plan and address the challenges in its various business segments will be critical to its long-term success. The competition in the online food delivery and quick commerce market is intense, and Eternal will need to differentiate itself from its competitors to attract and retain customers. This could involve offering a wider range of services, improving the customer experience, and leveraging technology to enhance its operations. The company's ability to innovate and adapt to changing market conditions will be crucial to its ability to stay ahead of the competition. Eternal's rebranding from Zomato signals a significant shift in the company's strategic direction. The company is no longer just a food delivery platform; it is now a broader technology company that is focused on providing a range of services to consumers and businesses. This diversification strategy is aimed at reducing the company's reliance on food delivery and capturing a larger share of the overall consumer market. The success of this strategy will depend on the company's ability to effectively integrate its various business segments and create a cohesive brand identity. Eternal's Q1FY26 results demonstrate the challenges and opportunities that come with diversifying a business and entering new markets. The company is experiencing strong growth in its quick commerce segment, but it is also facing increased costs and competition. The company needs to carefully manage its investments and operations to ensure that it can achieve sustainable profitability in the long run. The company's leadership team will play a critical role in guiding the company through this period of transition and ensuring that it can achieve its strategic goals. The ability to make sound decisions and effectively execute its plans will be essential to Eternal's long-term success. The company's investors will be closely monitoring its performance and holding it accountable for its results. The pressure to deliver strong financial results will be intense, and the company will need to demonstrate that it is capable of meeting its goals. Eternal's journey is just beginning, and the company has a long way to go before it can achieve its full potential. However, the company has a strong foundation and a clear vision for the future. With the right leadership and execution, Eternal has the potential to become a leading technology company in India and beyond.
The analysis of Eternal Ltd's Q1FY26 financial performance reveals several key trends and insights that are crucial for understanding the company's current position and future prospects. First and foremost, the dichotomy between revenue growth and profit decline is a significant point of concern. While the 70.4% increase in revenue demonstrates the company's ability to expand its market reach and attract more customers, the 90% drop in profit after tax (PAT) raises questions about the efficiency of its operations and the sustainability of its current business model. The primary driver of revenue growth is undoubtedly Blinkit, the company's quick commerce arm. Blinkit's impressive 155% YoY revenue increase highlights the growing demand for quick commerce services in India. This trend is likely to continue as more consumers embrace the convenience of having groceries and other essential items delivered to their doorstep within minutes. However, the rapid expansion of Blinkit's dark store network, while contributing to revenue growth, is also putting pressure on the company's profitability. The EBITDA loss of Rs 162 crore in Q1FY26 underscores the challenges of scaling a quick commerce business while maintaining profitability. The company needs to carefully manage its investments in Blinkit and focus on improving its operational efficiency to reduce its losses. In contrast to Blinkit's strong performance, the food delivery business is experiencing a slowdown in growth. The 17.7% YoY increase in adjusted revenue is a respectable figure, but it is significantly lower than the growth rates seen in previous years. This suggests that the food delivery market in India is becoming more competitive and that Eternal needs to find new ways to differentiate itself from its rivals. The increase in average monthly transacting customers (MTCs) for food delivery is a positive sign, but the growth rate is not as high as in the past. The company needs to focus on retaining its existing customers and attracting new ones to maintain its market share. The decline in revenue for the Going Out business is a concerning trend. This segment is supposed to complement the food delivery business by offering a broader range of dining experiences. The almost 10% YoY decrease in revenue suggests that the company is facing challenges in attracting customers to its Going Out platform. The increase in GOV for the business, however, indicates that customers who are using the platform are spending more money. Eternal needs to find ways to revitalize its Going Out business and make it more appealing to consumers. The strong performance of Hyperpure, the company's B2B supplies vertical, is a positive sign. The 89% YoY increase in revenue demonstrates the company's ability to leverage its existing relationships with restaurants and other food service providers to expand its B2B business. Hyperpure is a valuable asset for Eternal, and the company should continue to invest in this segment to drive further growth. Overall, Eternal's Q1FY26 results paint a complex picture of a company that is undergoing a significant transformation. The company is diversifying its business and expanding into new markets, but it is also facing challenges in maintaining profitability and growing its core food delivery business. The company's future success will depend on its ability to effectively manage its investments, improve its operational efficiency, and adapt to changing consumer preferences. The competition in the online food delivery and quick commerce market is intense, and Eternal will need to differentiate itself from its rivals to attract and retain customers. This could involve offering a wider range of services, improving the customer experience, and leveraging technology to enhance its operations. The company's ability to innovate and adapt to changing market conditions will be crucial to its ability to stay ahead of the competition. Eternal's rebranding from Zomato signals a significant shift in the company's strategic direction. The company is no longer just a food delivery platform; it is now a broader technology company that is focused on providing a range of services to consumers and businesses. This diversification strategy is aimed at reducing the company's reliance on food delivery and capturing a larger share of the overall consumer market. The success of this strategy will depend on the company's ability to effectively integrate its various business segments and create a cohesive brand identity. The company's leadership team will play a critical role in guiding the company through this period of transition and ensuring that it can achieve its strategic goals. The ability to make sound decisions and effectively execute its plans will be essential to Eternal's long-term success. The company's investors will be closely monitoring its performance and holding it accountable for its results. The pressure to deliver strong financial results will be intense, and the company will need to demonstrate that it is capable of meeting its goals. Eternal's journey is just beginning, and the company has a long way to go before it can achieve its full potential. However, the company has a strong foundation and a clear vision for the future. With the right leadership and execution, Eternal has the potential to become a leading technology company in India and beyond.
In conclusion, Eternal Ltd's Q1FY26 performance presents a nuanced perspective on the company's trajectory in the dynamic Indian online marketplace. The surge in revenue, primarily driven by Blinkit, signals a successful expansion into the quick commerce sector and underscores the growing consumer demand for rapid delivery services. However, the substantial decline in profit after tax (PAT) necessitates a deeper examination of the factors impacting profitability and operational efficiency. The contrasting performances of different business segments highlight the challenges and opportunities inherent in diversification. While Blinkit is experiencing rapid growth, the food delivery business faces increasing competition and slower growth rates. The decline in the Going Out business warrants strategic intervention to revitalize this segment and enhance its appeal to consumers. The strong performance of Hyperpure demonstrates the potential of the B2B supplies vertical and its contribution to overall revenue. The company's rebranding from Zomato to Eternal reflects a strategic shift towards becoming a broader technology platform, encompassing a wider range of services beyond food delivery. This diversification strategy is aimed at mitigating risks and capturing a larger share of the consumer market. However, the success of this strategy hinges on the company's ability to effectively integrate its various business segments and create a cohesive brand identity. Eternal's strong cash balance provides a solid foundation for future investments and strategic initiatives. However, the company needs to carefully manage its resources and prioritize investments that will drive long-term sustainable growth. The leadership team's ability to navigate the evolving competitive landscape, adapt to changing consumer preferences, and execute its strategic plans will be crucial to Eternal's future success. Investors will be closely monitoring the company's performance in the coming quarters to assess its ability to balance revenue growth with profitability and to effectively manage its diversified portfolio of businesses. The online food delivery and quick commerce market in India is characterized by intense competition, and Eternal must differentiate itself from its rivals to attract and retain customers. This could involve offering innovative services, enhancing the customer experience, and leveraging technology to optimize its operations. The company's ability to innovate and adapt to changing market conditions will be essential to its long-term competitiveness. Eternal's Q1FY26 results serve as a reminder of the complexities involved in building and scaling a technology business in a rapidly evolving market. The company's ability to address the challenges and capitalize on the opportunities that lie ahead will determine its ultimate success. The coming quarters will be critical in shaping Eternal's future and establishing its position as a leading player in the Indian online marketplace. The company's performance will be closely watched by investors, analysts, and competitors alike, as it navigates the challenges and opportunities that lie ahead. The ability to execute its strategic plans and deliver strong financial results will be essential to Eternal's long-term success. The company's journey is far from over, and the road ahead is likely to be filled with both challenges and opportunities. However, with the right leadership, strategy, and execution, Eternal has the potential to achieve its ambitious goals and become a dominant force in the Indian online landscape. The company's future success will depend on its ability to adapt, innovate, and execute its plans effectively, as it navigates the ever-changing dynamics of the online marketplace.
Source: Zomato-parent Eternal's Q1 revenue jumps 70%, shares surge 7.5%