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    Eternal Ltd

    ETERNALMixed
    Consumer Services·1 May 2025
    Management Summary

    Eternal's Q4 FY25 was marked by sustained Blinkit expansion amid peak competitive intensity across real estate, marketing, and last-mile costs. Food delivery growth decelerated to 16% YoY as the company shut down experiments like Zomato Quick and Everyday that failed to move the needle. Management maintained 20% as a long-term (4-5 year) CAGR target for food delivery. The company flagged next-day delivery platforms (Amazon, Flipkart) as emerging competition, with same-day 4-6 hour delivery narrowing the gap with quick commerce.

    Highlights

    8

    • Blinkit added ~300 dark stores in the quarter, continuing aggressive expansion

    • Blinkit Adjusted EBITDA margin at -2% of NOV; contribution margin flat QoQ despite competition

    • FY25 food delivery NOV/GOV grew 20%+ despite Q4 growth slowing to 16% YoY

    • Blinkit ad income exceeded 4% of GOV; customer fees approximately 3% of GOV

    • Blinkit market share maintained despite intensifying competition from multiple players

    • Shut down Zomato Everyday and Zomato Quick experiments in food delivery

    • Going-out (District) GOV grew 100%+ YoY with Adj EBITDA margin at -2% to -2.5%

    • Other income rose to INR 368 crore from INR 252 crore due to full-quarter QIP impact

    Concerns

    2

    • Competition across all vectors - real estate, marketing, delivery costs, pricing

    • Food delivery unable to crack growth vectors - affordability, assortment, delivery times

    What Changed2

    vs Q1 FY26

    Tone shiftGood → MixedGuidance items5 → 4 (-1)

    Key financials

    Single quarter

    08 metrics
    1. 01Food Delivery NOV Growth YoY16%
    2. 02Blinkit Adj EBITDA Margin (NOV)-2%
    3. 03Blinkit Ad Income (% of GOV)4%
    4. 04Going-Out GOV Growth YoY100%
    5. 05Going-Out Adj EBITDA Margin-2.3%

    Segment breakdown

    Blinkit (Quick Commerce)
    -2% Adj EBITDA Margin (NOV)300 stores Stores Added in Quarter4% Ad Income as % of GOV
    Food Delivery
    16% NOV Growth YoY
    Going Out (District)
    100% GOV Growth YoY-2.3% Adj EBITDA Margin
    Others (Bistro, Nugget, B2B)
    ₹16 Cr Segment Loss
    List

    Guidance & targets

    4
    CategoryTargetPriority
    Food Delivery
    Long-term NOV Growth CAGR
    20% over 4-5 years
    		Medium
    Food Delivery
    Delivery Time Reduction
    Average 30 min down to 20-25 min over time
    		Medium
    Going Out
    Losses Outlook
    Investment phase to continue for next year; losses range-bound
    		High
    Quick Commerce
    Inventory Model Transition Working Capital
    ~INR 1,000 crore (~15 days working capital)
    		High

    Risks & concerns

    8
    RiskSeverity

    Competition across all vectors - real estate, marketing, delivery costs, pricing

    Management noted competition hasn't reduced, with price action, real estate competition, marketing and incentive costs all at peak levels. Every part of the business becomes more expensive. — Both acknowledged

    high

    Next-day delivery platforms (Amazon, Flipkart) shrinking delivery times to 4-6 hours

    Management proactively flagged this as an emerging competitive threat to quick commerce — Management acknowledged

    medium

    Delivery partner supply crunch impacting food delivery growth

    Rapid e-commerce expansion compounded seasonal summer supply crunch. Management expects supply to catch up but acknowledges temporary constraint. — Both downplayed

    medium

    Food delivery unable to crack growth vectors - affordability, assortment, delivery times

    Akshant explicitly said 'we've not been able to actually make a meaningful dent on these three vectors despite us trying multiple things in the last one or two years' — Management acknowledged

    high

    Rapido's subscription-based food delivery model potentially disrupting commission model

    Management said they're not clear how the model can work for all stakeholders; will wait and watch — Analyst downplayed

    low

    Areas of Evasion(3)

    • Last-mile delivery cost increases
    • City-level expansion data
    • Hyperpure working capital breakdown

    Q&A highlights

    3

    “The impact of competition is visible in the lack of significant margin expansion that we would have otherwise expected.”

    Explains why Blinkit margins have stagnated despite store maturation - competition is the primary headwind absorbing natural margin improvement

    asked by Manish Adukia (Goldman Sachs)

    1 min read4 chapters

    Detailed Narrative

    01

    Competition at Peak Intensity Across All Dimensions

    Management described competition as elevated across every dimension: real estate costs for dark stores, marketing spend, delivery partner incentives, and customer discounts. The impact manifests in lack of margin expansion rather than market share loss. Blinkit maintained its market share but at the cost of profitability improvement, with Adj EBITDA stuck at -2% of NOV when it could have been profitable absent competition.

    02

    Food Delivery Growth Trajectory Concerns

    Food delivery growth decelerated to 16% YoY in Q4 FY25 despite FY25 full-year NOV/GOV growing 20%+. Management explicitly acknowledged failure to make meaningful progress on affordability, assortment, and delivery time vectors despite trying multiple approaches over 1-2 years. The 20% growth target was clarified as a 4-5 year CAGR rather than annual guidance. Zomato Quick (10-minute delivery) and Zomato Everyday (daily meals) were both shut down.

    03

    Strategic Differentiation: No Private Labels, No Megapods

    Blinkit explicitly rejected private labels (preferring to operate as a platform), MAX saver/super saver equivalents, and megapod formats adopted by competitors. Management said they don't see value in these from a customer perspective. This represents a clear strategic divergence from Swiggy Instamart and Zepto approaches.

    04

    Emerging Competitive Threat from Horizontal E-commerce

    Management proactively flagged Amazon and Flipkart's shrinking delivery times (4-6 hours same-day) as an emerging competitive threat to quick commerce. This represents a new dimension beyond existing QC players, potentially compressing the convenience premium that justifies quick commerce's higher costs.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.