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    Eternal Q1 FY27 earnings call

    ETERNAL
    Consumer Services·22 Jul 2026
    Management Summary

    Eternal Ltd reported a strong Q1 FY27 with Blinkit achieving 21% QoQ volume growth and an upward revision in long-term quick commerce guidance to 6%. While competitive intensity remains high, management finds it more predictable, allowing for strategic investments in larger stores and improved supply chain efficiency, which has reduced net working capital days. However, AOV saw a slight sequential dip, and increased operating costs impacted contribution margins, with a significant portion of Q1 capex attributed to lumpy warehousing investments.

    Highlights

    5

    • Blinkit recorded 21% QoQ volume growth, indicating strong operational performance. (Swapnil Potdukhe, Page 7)

    • Long-term quick commerce guidance was raised from 5-6% to 6%, reflecting increased confidence in margin visibility due to capex investments and efficiency gains. (Akshant Goyal, Page 3)

    • Net working capital days reduced from 18 to 14, with a target of 12 days, driven by lower inventory days and improved supply chain efficiency. (Akshant Goyal, Page 11)

    • Management views competitive intensity in quick commerce as 'more predictable,' allowing for better strategic planning. (Albinder Singh Dhindsa, Page 4)

    • The Bistro business is expanding, adding approximately 10 kitchens per quarter, with older kitchens showing progress in throughput and efficiency. (Akshant Goyal, Page 7)

    Concerns

    4

    • Blinkit's AOV has seen a slight drop for two consecutive quarters, attributed to competitive pricing and a mix of lower-NAOV assortment, though year-on-year it remains flat. (Albinder Singh Dhindsa, Akshant Goyal, Page 6)

    • Blinkit's take-rate improvement is not fully flowing down to contribution margin due to increased costs of doing business, such as minimum wage hikes and larger store openings. (Albinder Singh Dhindsa, Page 7)

    • The Q1 FY27 capex of ₹700 crore for 200 stores significantly exceeds the typical capex per store guidance of ₹2.5 crore, indicating lumpiness due to warehousing investments. (Swapnil Potdukhe, Akshant Goyal, Page 8)

    • A tax reversal contributed to a higher Operating Cash Flow this quarter, which is noted as a non-structural, one-time event. (Kunal Swarup, Page 12)

    Key financials

    Metrics

    5

    Periods

    2

    Headline

    4
    • Blinkit QoQ Volume Growth
      0.21 decimal fraction
      QoQ+21%
    • Blinkit Inventory Losses (as % of NOV)
      1.8%
    • Net Working Capital Days
      14 days
    • Payables Increase
      ₹1,650 Cr

    Q1 FY27

    1
    • Capex
      ₹700 Cr

    Segment breakdown

    Blinkit
    21% QoQ Volume Growth
    Bistro
    10 Kitchens Added per Quarter
    List

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Capex

    ₹700 crores

    Guidance & targets

    5
    CategoryTargetPriority
    Profitability
    Quick Commerce Long-Term Adjusted EBITDA Margin
    6%
    		High
    Profitability
    Long-Term EBIT Margin
    4%
    		High
    Profitability
    Long-Term Adjusted EBITDA Margin
    6%
    		High
    Capex
    Capex per Store
    INR 2.5 crore
    		High
    Efficiency
    Net Working Capital Days
    12 days
    		High

    What to watch in Q2 FY27

    5

    Blinkit AOV trend

    next quarter
    Currentlower for two quarters in a row but year-on-year flat
    Targetremain in the same range

    Why it matters

    AOV stability is important for unit economics, especially with competitive pricing pressures.

    Generally, Aditya, we're not expecting the NAOV to grow from here. If you look at year-on-year, it's flat. That accounts for seasonality for Q1, and we broadly expect NAOVs to remain in the same range. In Q3, they might climb up again because of seasonality, but broadly, we don't think they should move up in a meaningful way.

    Risks & concerns

    6
    RiskSeverity

    High competitive intensity in quick commerce

    Competition is high with many aggressive players, but the nature of competition (subsidies) has become predictable. — Both acknowledged

    medium

    Unsustainability of pricing-led growth

    Discount-led growth leads to customer churn when subsidies are removed, with no clear path to recovery or retention. — Management acknowledged

    high

    Impact of increased cost of doing business on contribution margins

    Minimum wage increases and the initial lower contribution from newly opened larger stores are impacting contribution margins. — Management acknowledged

    medium

    Lumpiness in capex investment

    Q1 capex of ₹700 crore was higher than typical per-store guidance due to lumpy investments in warehousing. — Analyst acknowledged

    low

    Seasonality in Blinkit business

    Blinkit is a seasonal business, with Q1 last-mile costs typically higher due to summer and other factors. — Management acknowledged

    low

    Temporary dip in food delivery restaurant count

    A slight dip in monthly active restaurant count was due to the LPG situation in the country last quarter, causing some restaurants to go offline. — Management acknowledged

    low

    Q&A highlights

    8

    “First quarter, so far, was the peak of competitive intensity that we have seen till date because the number of players is higher and everybody was more aggressive. But when we look at competitive intensity and the way that it has evolved over the last few quarters, what we are seeing is that most of the competition is coming in the form of subsidies to customers on products and on delivery fees and that is what has become more predictable.”

    Management believes the competitive landscape, while still high, has become more predictable, which is crucial for strategic planning and long-term margin visibility.

    asked by Vivek Maheshwari

    2 min read5 chapters

    Detailed Narrative

    01

    Blinkit Performance and Strategic Focus

    Blinkit demonstrated strong operational growth in Q1 FY27, achieving 21% QoQ volume growth. Despite this, the Average Order Value (AOV) has seen a slight sequential dip for two quarters, though it remains flat year-on-year. Management attributes this to competitive pricing, seasonal patterns, and a mix shift towards lower-NAOV assortments. The company's strategy focuses on order growth and maintaining AOV at current levels, which is deemed profitable.

    02

    Quick Commerce Competitive Landscape and Margin Outlook

    Management views the competitive intensity in quick commerce as having peaked in Q1 FY27 but now considers it 'more predictable.' They emphasize that discount-led growth is unsustainable and creates a 'trap' for platforms, as customers are unlikely to be retained without subsidies. This predictable environment, combined with increased capex per store and improved efficiencies, has led to an upward revision of long-term quick commerce Adjusted EBITDA margin guidance from 5-6% to 6%.

    03

    Capital Expenditure and Supply Chain Efficiency

    Eternal Ltd reported a Q1 FY27 capex of approximately ₹700 crore, which funded the addition of around 200 new stores and significant warehousing investments. While the typical capex per store guidance is ₹2.5 crore, the higher Q1 figure is attributed to the lumpiness of warehousing investments and broader supply chain enhancements. These investments aim to improve overall supply chain efficiency, allowing for more products in single warehouses and more efficient shipping, rather than solely increasing store throughput.

    04

    Net Working Capital and Financial Health

    The company successfully reduced its net working capital days from 18 to 14, with a target to further decrease it to 12 days. This improvement is primarily driven by lower inventory days, achieved through better replenishment and throughput across stores and the supply chain. While Operating Cash Flow (OCF) was higher this quarter due to a tax reversal of ₹1,650 crore, management clarified this was a non-structural, one-time📎 event.

    05

    Bistro and Other Growth Avenues

    The Bistro business continues its expansion, adding approximately 10 kitchens per quarter. Older kitchens are showing promising progress in throughput, assortment, and operational efficiency, building management's confidence for more aggressive expansion in the future. The 'Nugget' business, an enterprise AI product, is in stealth mode but showing good traction. The 'District' business, operating across five categories, sees dining-out and movies as the largest revenue contributors, with retail stores and events showing promise.

    This is an AI-generated summary of a publicly available earnings call transcript.