Eternal Ltd — Q3 FY25 earnings call

Call held 20 Jan 2025

Management summary

Zomato's Q3 FY25 was defined by Blinkit's accelerated expansion past the 1,000-store milestone ahead of schedule, while food delivery growth moderated in sync with broader urban consumption slowdown. Management was transparent about expected near-term loss increases as ~30%+ of the network remains new, but emphasized that mature store cohorts remain profitable with 6.4% contribution margins. The quarter saw peak competitive intensity in quick commerce with elevated marketing spend, particularly backloaded in November-December.

Highlights

  • Blinkit surpassed 1,000 dark stores ahead of March 2025 guidance, adding ~300 stores in 4-5 months

  • Top 50 mature Blinkit stores achieving 6.4% contribution margin

  • Blinkit AOV rose to over INR 700 (vs INR 660 in Q2), driven by festive season and electronics

  • 80% of Blinkit business still in top 8 cities; 20% of new store expansion from new cities

  • Blinkit losses expected to increase in absolute terms over next 1-2 quarters due to expansion

  • Food delivery saw broad-based slowdown in line with macro urban consumption moderation

  • Core Blinkit customer retention (Dec 2022 cohort) improved 1 ppt despite peak competitive quarter

  • Almost 100% of Blinkit losses attributed to expansion, not competition

Concerns

  • Blinkit losses to increase in absolute terms as 30%+ of network is new stores

Key financials

  1. Blinkit Dark Stores 1,000 stores
  2. Blinkit AOV ₹700
  3. Top 50 Stores Contribution Margin 6.4%
  4. Core Customer Delivery Fee 20 INR per order
  5. Core Customer Retention (2yr cohort) 40%

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)
    6.4% Top 50 Stores Contribution Margin1,000 stores Stores Crossed80% Top 8 Cities Share of Business
  • Food Delivery
    — Growth Trend

Guidance & targets

Quick Commerce

  • Store Expansion Target Quick Commerce · CY2025 · High confidence 2,000 stores by end of calendar year 2025

    Previously 1,000 by March 2025 (achieved early) → 2,000 stores by end of calendar year 2025

    we will know better once we are closer to 1,600-1,700 stores and understand what the pipeline looks like after reaching 2,000 stores

    — Albinder Singh Dhindsa

  • Losses Trajectory Quick Commerce · H2 FY25 / H1 FY26 · High confidence Absolute losses expected to increase in next 1-2 quarters
    we do expect the investments in Blinkit to go up. And as a result, the losses on an absolute basis are expected go up in the next one or two quarters.

    — Akshant Goyal

Food Delivery

  • Adj EBITDA Margin Target Food Delivery · Near term · Medium confidence 5% in next few quarters
    What drives your confidence in margins reaching 5% in the next few quarters?... we continue to drive confidence from the progress we are seeing across various parts of the business

    — Akshant Goyal

Risks & concerns

  • Blinkit losses to increase in absolute terms as 30%+ of network is new stores

    high

    Management explicitly guided for increasing absolute losses in next 1-2 quarters as store additions run at 30%+ of network. No loss cap mindset; will expand as fast as possible.

    Management acknowledged

  • Food delivery growth slowdown in line with macro urban consumption moderation

    medium

    Management acknowledged broad-based slowdown but refused to predict recovery timeline

    Both acknowledged

  • Real estate competition and cost inflation for dark stores

    medium

    Significant competition for same real estate in most cities; unusual run-up in rents and picker salaries expected to normalize

    Both acknowledged

  • Marketing spend escalation as competitive intensity peaks

    medium

    Marketing spend backloaded in Q3, expected to increase further with each new store addition. Digital marketing costs rising as more competitors target same customers.

    Management acknowledged

Areas of evasion (2)

  • Specific city-level data
  • Competitive retention initiatives details

Q&A highlights

3 direct
Blinkit loss attribution: expansion vs competition Direct
Almost 100% of the losses will be due to expansion... Unless something meaningfully changes with competition that we are unaware of today.

Critical insight that losses are self-inflicted investment, not competitive pressure, which is bullish for long-term unit economics

Asked by Manish Poddar (Invesco)

Mature store contribution margins and upside potential Direct
I don't think this is the peak. Even for the more mature stores, there is a fair bit of cost that we are paying due to operating in a competitive market

Top 50 stores at 6.4% contribution margin with room for expansion as competition normalizes, establishing the long-term economic potential of the model

Asked by Yogesh Aggarwal (HSBC)

GOV market share maintained despite peak competition Direct
we don't believe our GOV market share has changed meaningfully despite the competition

Market share maintenance without heavy subsidization (discounts nearly zero) validates Blinkit's service-quality-focused competitive strategy

Asked by Manish Poddar (Invesco)

1 min read 4 chapters

Detailed narrative

Blinkit Crosses 1,000 Stores Ahead of Schedule

Blinkit surpassed the 1,000 dark store milestone ahead of its March 2025 guidance, adding roughly 300 stores in 4-5 months. More than half of expansion continues in top 8 cities through densification, with 20% from new cities. Store breakeven timeline remains at 2-3 months. Management indicated no fixed budget for expansion and will scale as fast as organizationally possible.

Mature Store Economics Validate Long-Term Model

Top 50 mature stores achieved 6.4% contribution margin, which management said is not the peak. Core customers (Dec 2022 cohort) showed 40% retention with 1 ppt improvement in the most competitive quarter in 2-3 years, paying INR 20 per order delivery fee. The top 300 stores maintained profitability without QoQ decline despite competition, with margin expansion paused rather than declining.

Food Delivery Slowdown Amid Macro Headwinds

Food delivery growth moderated in line with broader urban consumption slowdown affecting multiple consumer companies. Management refused to predict recovery timing but expressed confidence in the 5% Adj EBITDA margin target for the near term. Quick food delivery initiatives including Bistro and less-than-15-minute restaurant delivery remain very nascent.

Marketplace Model Affirmed for Quick Commerce

Management confirmed commitment to marketplace model for Blinkit with no plans to move to inventory-led model. Discounts remain nearly zero as a marketplace business. Ad income and delivery fees are the key revenue drivers beyond product commissions. Category expansion into electronics and general merchandise drove AOV increase but also widened the gap between MRP-based GOV and actual customer-paid values.

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