Eternal Ltd — Q1 FY26 earnings call

Call held 21 Jul 2025

Management summary

Eternal's Q1 FY26 was dominated by Blinkit's rapid expansion and strategic shift to a 1P inventory model. Quick commerce continued to grow strongly with most growth coming from existing polygons rather than new city expansion. Food delivery growth decelerated to 13% YoY but management indicated early signs of bottoming out with improving app opens and resurrection rates. The company maintained a disciplined approach on competition, noting improved competitive dynamics versus the prior quarter.

Highlights

  • Blinkit reached 1,500+ dark stores with visibility to scale to 3,000 stores

  • Delhi Blinkit GOV grew 70% YoY despite being geographically well-covered

  • Less than 5% of Blinkit growth came from new expansion areas

  • Blinkit Adjusted EBITDA margin improved from -2.4% to -1.8% sequentially

  • Blinkit Contribution margin at 3.9% of NOV vs 4.9% year ago

  • Blinkit MTUs reached ~17 million vs ~23 million for food delivery

  • Food delivery NOV growth at 13% YoY, down from 27% in year-ago quarter

  • Announced shift to 1P inventory ownership model for Blinkit over 2-3 quarters with ~100bps margin benefit

Concerns

  • Quick commerce competitive intensity may resurge if competitors raise capital

  • Food delivery growth deceleration with NOV growth dropping from 27% to 13% YoY

Key financials

  1. Blinkit GOV (Annualized) $5,000 Mn
  2. Blinkit Dark Stores 1,500 stores
  3. Blinkit MTUs 17 Mn
  4. Food Delivery MTCs 23 Mn
  5. Blinkit Adjusted EBITDA Margin -1.8%
  6. Blinkit Contribution Margin (NOV basis) 3.9%
  7. Food Delivery NOV Growth YoY 13%

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)
    -1.8% Adj EBITDA Margin3.9% Contribution Margin2.5% Mature Store Margin
  • Food Delivery
    13% NOV Growth YoY
  • Going Out (District)
    — Losses Trend

Guidance & targets

Quick Commerce

  • 1P Inventory Transition Quick Commerce · FY26 · High confidence Most inventory on own books within 2-3 quarters
    In that timeframe, we should be able to move most of our business to inventory ownership and the margin accretion should also happen in that timeframe.

    — Akshant Goyal

  • 1P Margin Benefit Quick Commerce · FY26 · High confidence ~100 basis points Contribution margin improvement
    There is an now an interim gross margin of the business... Contribution margins, of course, in terms of definition and calculation, will not change.

    — Akshant Goyal

  • Store Count Visibility Quick Commerce · Medium term · High confidence 3,000 stores

    From 1,500+ stores today

    the growth rates will be high as we are still building out more infrastructure, and getting to 3,000 stores will take time

    — Akshant Goyal

  • EBITDA Margin Direction Quick Commerce · Near term · Medium confidence Continued improvement toward profitability

    From -2.4% last quarter today

    the margins have improved from -2.4% to -1.8% in this quarter. What we are saying is we expect that projection to continue, subject to competitive intensity remaining the same.

    — Akshant Goyal

Food Delivery

  • Growth Rate Food Delivery · Long term · Medium confidence 20% long-term, near-term visibility unclear

    From 13% YoY current today

    we still do think that in the long term the business can grow at 20%, although that visibility is not there in the near term at this point

    — Akshant Goyal

Risks & concerns

  • Quick commerce competitive intensity may resurge if competitors raise capital

    high

    Management acknowledged they will react to competitive circumstances and maintaining leadership position is priority, potentially at the cost of profitability

    Both acknowledged

  • Food delivery growth deceleration with NOV growth dropping from 27% to 13% YoY

    high

    Management noted slowdown in transacting customers and app opens, but pointed to early signs of recovery in Q2 FY26

    Both acknowledged

  • Quick commerce cannibalization of food delivery

    medium

    Akshant acknowledged quick commerce has been a headwind for food delivery as some consumption moved to quick commerce

    Analyst acknowledged

  • Going-out segment (District) losses and Bistro investment uncertainty

    medium

    Losses expected to remain range-bound; no specific guidance on Bistro AOVs or short-term trajectory

    Both acknowledged

  • GLP-1 drugs potentially impacting food consumption and delivery volumes

    low

    Management said it's too early and nascent to have a view, noting no GLP-1 impact seen in food delivery in other countries

    Analyst downplayed

Areas of evasion (4)

  • Category breakdown for Blinkit
  • Bistro AOVs
  • Leadership KPIs and rotation criteria
  • Same-store sales metrics

Q&A highlights

3 direct
Blinkit 1P inventory transition and margin impact Direct
In that timeframe, we should be able to move most of our business to inventory ownership and the margin accretion should also happen in that timeframe.

Strategic shift to 1P model is the biggest near-term catalyst for Blinkit margins, with ~100bps Contribution margin uplift expected

Asked by Manish Adukia (Goldman Sachs)

Food delivery growth bottoming and outlook Direct
the year-on-year growth has sort of bottomed out and we are seeing now better app opens from our consumers and better resurrection rates

Food delivery has been decelerating for several quarters; early signs of reversal are a key positive signal for the stock

Asked by Gaurav Rateria (Morgan Stanley)

Quick commerce competitive landscape and megapod strategy Direct
we don't see the opportunity there. So that's why we are not doing that.

Blinkit explicitly rejecting megapod/MAX saver model differentiates strategy vs competitors; could be a risk if market shifts toward larger basket delivery

Asked by Sachin Salgaonkar (Bank of America)

1 min read 4 chapters

Detailed narrative

Blinkit's Strategic Pivot to 1P Inventory Model

Blinkit announced a major shift from marketplace (3P) to owned inventory (1P) model, expected to complete within 2-3 quarters. This is projected to yield approximately 100 basis points improvement in Contribution margin. The change is primarily administrative, reducing compliance burden for brands while improving availability and fill rates. Revenue recognition will shift to become very similar to NOV as the company owns inventory directly.

Quick Commerce Growth Driven by Existing Markets

Less than 5% of Blinkit's growth in Q1 FY26 came from new expansion areas, with the bulk driven by existing polygons. Delhi, a geographically well-covered market, grew 70% YoY. The company has visibility to 3,000 stores from the current 1,500+ and expects high growth rates for at least the next two years. Adjusted EBITDA margin improved from -2.4% to -1.8% sequentially, with some mature stores already at 2.5% margin.

Food Delivery Growth Deceleration Shows Early Signs of Reversal

Food delivery NOV growth decelerated to 13% YoY from 27% a year ago, driven by a slowdown in transacting customers and app opens. However, management noted early signs of bottoming out with improving resurrection rates and better app engagement in the first three weeks of Q2. The company maintained its long-term 20% growth aspiration but acknowledged near-term visibility is limited.

Competitive Dynamics and Market Positioning

Management noted improvement in competitive dynamics versus three months ago and expects margins and absolute losses to improve. However, they remained cautious, emphasizing they will react to market circumstances and prioritize maintaining leadership position. Notably, Blinkit rejected the megapod/MAX saver model adopted by competitors, stating they don't see the opportunity in 30-40 minute delivery timeframes.

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