Eternal Ltd — Q1 FY25 earnings call

Call held 1 Aug 2024

Management summary

Zomato's Q1 FY25 was a strong quarter with food delivery growing 27-28% YoY and Blinkit continuing rapid expansion with 113 new stores. The company outlined an ambitious 2,000-store target for Blinkit while maintaining marketplace model commitment. SKU count has grown 5x to 25,000 in two years. Management showed high confidence with no visible demand slowdown and food delivery margins trending toward the 4-5% target. The company also announced plans to launch District as a separate app for the going-out business.

Highlights

  • Food delivery GOV growing at 27-28% YoY with 20%+ CAGR guidance maintained

  • Blinkit added 113 new dark stores in Q1; new stores reaching 1,000 orders/day in 2-3 months

  • Blinkit SKUs expanded to 25,000 per neighborhood (from 5,000 two years ago)

  • Hyperpure scaled to INR 5,000 crore revenue business

  • ~50-55% of food delivery GOV from Zomato Gold members

  • Blinkit store profitability time decreasing as network and brand strengthen

  • District (going-out) planned as separate app and brand, similar to Blinkit model

  • 2,000 store target by March 2026; only hindrance is execution ability

Key financials

  1. Food Delivery GOV Growth YoY 27.5%
  2. Blinkit New Stores in Quarter 113 stores
  3. Blinkit Max SKUs per Neighborhood 25,000 SKUs
  4. Hyperpure Revenue (annualized) ₹5,000 Cr
  5. Zomato Gold GOV Share 52.5%
  6. Food Delivery FY20-FY24 CAGR 30%

What they filed

Q1 FY27: revenue up 182.0%, net profit up 268.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,799 5,405 5,833 7,167 13,590 +183%16,315 +202%17,292 +196%20,211 +182%
EBITDA226 162 72 115 239 +6%368 +127%486 +575%594 +417%
Net profit176 59 39 25 65 −63%102 +73%174 +346%92 +268%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Blinkit (Quick Commerce)
    113 stores Stores Added2.5 months Store Breakeven Time25,000 SKUs SKUs per Neighborhood
  • Food Delivery
    27.5% GOV Growth YoY52.5% Gold Member GOV Share
  • Hyperpure (B2B Supply)
    ₹5,000 Cr Revenue Run Rate

Guidance & targets

Food Delivery

  • GOV Growth Food Delivery · Multi-year · High confidence 20%+ CAGR, currently trending 27-28%
    We believe that GOV growth of 20% plus should be able to continue in the near term as well. Currently, we're trending at 27%-28% YoY growth.

    — Akshant Goyal

  • Adjusted EBITDA Margin Food Delivery · Few quarters · High confidence 4-5%
    in a few quarters from now on, we should get to that range we're talking about, we're not very far from that now

    — Akshant Goyal

Quick Commerce

  • Store Count Target Quick Commerce · FY26 · High confidence 2,000 stores by March 2026
    we feel confident about achieving these outcomes

    — Akshant Goyal

  • Profitability Quick Commerce · Long term · High confidence Business to remain profitable; long-term margins comparable to food delivery or higher
    we have fair confidence that this business can be as profitable as food delivery in terms of margin, if not more

    — Akshant Goyal

Risks & concerns

  • Social security benefits for delivery partners could impact margins

    medium

    No clarity on regulations yet; management expects impact to be absorbed or passed to customers

    Analyst downplayed

  • Blinkit cannot own inventory due to FDI/shareholding constraints

    medium

    Current shareholding structure prevents inventory ownership; marketplace model maintained as strategic choice but also a structural constraint

    Analyst acknowledged

  • Competition entering quick commerce (Flipkart Minutes, others)

    medium

    Management focused on own business, growing 120%+ and operating at full capacity; not focused on market share at this stage

    Analyst downplayed

  • Heat waves and elections impacted Q1 delivery costs and margins

    low

    Seasonal factors led to slightly lower contribution margins; expected to reverse but different quarters have different dynamics

    Both acknowledged

Areas of evasion (4)

  • Blinkit GMV category mix
  • Food delivery AOV specifics
  • Specific margin levers
  • User overlap data

Q&A highlights

2 direct
Blinkit operational moat through tech systems and franchise model Partial
I don't think it is easy to replicate. Of course, it's always possible, but it requires not just operating rigor but also a lot of systems, knowledge of how the entire ecosystem works

Rare articulation of Blinkit's competitive moat beyond just scale - tech systems, operating culture, and franchise partner ecosystem built over years

Asked by Kireet Atluri (Jetha Global)

Blinkit SKU expansion from 5,000 to 25,000 with no speed compromise Direct
We want to stick to, and we continue to stick to, delivering all of this assortment in ten minutes. That will always be our operating principle.

5x SKU expansion in 2 years while maintaining 10-minute delivery demonstrates scalability of the model without fundamental trade-offs

Asked by Samarth Patel (Equirus)

Blinkit franchise capex model and partner nurturing Direct
we want to nurture the ecosystem so that hard-working folks actually get an opportunity to upgrade their life by working with us

Blinkit taking on store capex and giving multi-store opportunities to proven partners reveals sustainable franchise scaling approach

Asked by Abhishek Banerjee (ICICI)

1 min read 4 chapters

Detailed narrative

Food Delivery Growth Robust at 27-28% with No Slowdown Visible

Food delivery GOV grew 27-28% YoY in Q1 FY25, with growth broad-based across top 8 and non-top 8 cities. Management saw no visible consumption slowdown despite concerns from other discretionary companies. South India market share has converged close to national average. Gold membership base mature at 50-55% of GOV. Platform fee of INR 5-6 introduced as new revenue lever.

Blinkit's Path to 2,000 Stores with Scalable Franchise Model

Blinkit added 113 stores in Q1, with stores reaching 1,000 orders/day in 2-3 months. The company takes upfront capex for stores while franchise partners provide bank guarantees, enabling proven partners to get multiple stores. SKU count expanded 5x to 25,000 per neighborhood in two years while maintaining 10-minute delivery commitment. Only hindrance to reaching 2,000 stores is execution ability.

Hyperpure Emerges as INR 5,000 Crore Revenue Business

The B2B supply business Hyperpure has scaled to INR 5,000 crore revenue, exceeding bullish expectations. It serves mid-level restaurants with next-day delivery of quality supplies. Management is running breakeven and experimenting to unlock larger TAM including new restaurant segments. Some capex increase attributed to warehousing capacity expansion for Hyperpure.

District App Launch and Strategic Cash Preservation

The going-out business will launch as District, a separate app and brand similar to the Blinkit approach, leveraging Zomato app traffic for lower customer acquisition costs. Management is preserving cash on balance sheet given multiple businesses competing against well-funded private companies. No plans for shareholder distributions or major inorganic moves at this time.

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