Blinkit powers Eternal’s Q1 growth as taxes, investments weigh on profit

Eternal Ltd’s June quarter (Q27) results highlighted how quickly Blinkit is reshaping the company. Revenue rose fivefold as the flash-trading business aggressively scaled, but high taxes and continued spending on new businesses kept profit growth low.

The Gurugram-based company reported consolidated revenues of: ₹20,211 crore in the first quarter, up 182% YoY and ahead of the previous year ₹19,947 crore average estimate of 24 analysts surveyed Bloomberg. Net profit increased by 5 percent ₹92 crore but I missed it ₹300-crore consensus estimate, based on 21 analyst estimates, as higher tax expense and investments in new businesses offset stronger operating profits from food delivery, express commerce and Hyperpure.

Blinkit remained the company’s largest business in terms of revenue, contributing approximately 77.5% of consolidated revenue, up from 76.5% in the March quarter. Food distribution fell to 15.3% from 15.8%, while Hyperpure contributed 5.1%, down from 5.7% in the previous quarter.

Eternal’s shares closed down 1.15 percent ₹283.40 on BSE on Wednesday.

Fast trade spurs growth

Blinkit’s revenue increased more than sixfold on an annual basis ₹15,664 crore, helped by Eternal’s shift to inventory-driven (1P) model. Net order value (NOV) (the value of orders after cancellations, refunds and discounts) increased by 86% ₹17,132 crore.

Adjusted EBITDA increased for the fifth consecutive quarter to 0.6% in November and ₹102 crore against loss ₹162 crore a year ago.

“We continue to focus our efforts on the three pillars of long-term growth – product assortment expansion, geographical expansion and demand concentration. This quarter, we continued to make progress on product range expansion in the top eight cities and geographical expansion in the next 30 cities,” Eternal group chief executive officer (CEO) Albinder Dhindsa said in the shareholder letter.

The company said it will open “gourmet” stores in select locations in the top eight cities to encourage premiumization through selected premium brands. Mint was the first to report on the plans.

Blinkit fulfilled 156 million orders during the quarter and added 200 new dark stores, bringing its network to 2,443. Average NOV per store increased by approx. ₹11 lakh per day, much higher than the company’s earlier long-term forecast ₹7 lakhs.

On the earnings call, Chief Financial Officer Akshant Goyal said Eternal increased its long-term adjusted EBITDA margin guidance to approximately 6% from the previous range of 5-6%; This reflects growing confidence in Blinkit’s unit economics as larger stores, higher production and supply chain efficiency increase profitability.

He added that the bulk of Blinkit’s growth continues to come from existing cities, with higher spending among older customer groups coming from more frequent orders rather than larger basket sizes, and average order values ​​are expected to remain generally stable over time.

Management reiterated plans to continue investing aggressively in Blinkit, saying the business could generate a pre-tax ROCE of approximately 42% at steady state. Eternal invested approx. ₹3,000 crore in the last four years to build around 19 million square feet of fast-track business infrastructure in over 300 cities.

Revenue from Zomato’s food delivery business increased 37% ₹3,100 crore. NOVEMBER increased by 20% ₹10,769 crore for the fifth consecutive quarter of incremental growth, while adjusted EBITDA margin rose to 5.6% of NOV, pushing adjusted EBITDA to 34%. ₹606 crore.

“We don’t think of it as a compromise. If we’re doing our job well, growth and margins should come together because growth in this business comes from making the platform more useful to more people, which increases frequency, density and efficiency,” said Deepinder Goyal, vice president.

“If there comes a point where we need to spend margin to grow, we will do so without hesitation. But right now the business is growing because it is better, not because we are buying growth,” he added.

Competition is intensifying

Competition in express commerce remains intense, with Swiggy Instamart expanding its dark store network, Amazon Now and Flipkart Minutes investing in fulfillment centres, expansion and product assortment. Zepto’s proposed initial public offering has also sharpened investors’ scrutiny of the industry’s ability to balance growth with profitability.

Blinkit’s advantage comes from infrastructure rather than pricing, Dhindsa said.

“Competitive intensity remains high but has become more predictable. While competitors often focus primarily on pricing, we are the only player investing simultaneously in product assortment depth, geographic expansion and supply chain infrastructure,” he said.

Speaking on the earnings release, Dhindsa said the June quarter was “probably the peak of competitive intensity” so far, with most rivals relying on product subsidies and discounted delivery charges. He said competitors have limited ability to deepen discounts without increasing financial losses.

Dhindsa argued that customer acquisition based on pricing was unsustainable as businesses that relied on subsidies struggled to retain customers when discounts were withdrawn.

“Infrastructure-led growth creates business advantage; every new store, every new category and every new city increases capacity to serve more customers at lower marginal cost. So we can grow quickly and increase profitability at the same time,” he added.

Goyal said Blinkit’s experience in various southern markets shows that discount-led growth does not mean permanent market leadership. Instead, investments in infrastructure, product diversity and service quality have helped the company become the market leader in terms of net order value.

While Eternal continues to pass on productivity gains to customers through sustainably low prices, it said it does not believe in offering temporary discounts just to acquire users because it is difficult to retain those customers once subsidies are withdrawn.

The company said customer retention remains resilient despite aggressive pricing from rivals. The latest customer groups have seen a retention rate of around 50% after four quarters, generally in line with the March quarter, while retained users’ spending continues to increase over time.

New initiatives are gaining momentum

District, Eternal’s dating platform, reported in November ₹3,218 crore, up 60% year-on-year. The platform now connects users to over 45,000 restaurants, 5,000 movie screens, 6,000 retail stores, 7,500 events and 2,000 attractions across India.

Hyperpure’s revenue reported ₹1,034 crore. On a like-for-like basis, revenue grew 27% year-on-year while adjusted EBITDA turned positive. ₹6 crore against loss ₹18 crore a year ago.

Eternal also said its 10-minute meal delivery service Bistro has surpassed 100,000 orders per day.

Management said in its earnings release that Bistro is adding about 10 kitchens each quarter and will continue to expand cautiously while improving menu mix, pricing and operating efficiencies before accelerating rollouts.

Eternal’s AI-powered customer support platform, Nugget, was first deployed internally and then began serving external enterprise customers. Management said the enterprise AI platform has attracted early interest but remains in the investment phase, and more details will be shared as the business matures.