Eternal share price: Shares of Eternal Limited fell almost 2% during Friday’s trading session following a sharp drop in Q2 profitability. The food delivery and quick commerce company, which operates the Zomato and Blinkit brands, announced a 63% year-on-year (YoY) decline in the consolidated net profit to ₹65 crore for the quarter ending in September.
The firm, which changed its name to Eternal in March, had reported a net profit of ₹176 crore for the June-September quarter of the previous fiscal year.
For the quarter in review, Eternal’s revenue from operations reached ₹13,590 crore, up from ₹4,799 crore in the same period last year, driven by the quick commerce segment.
The company incurred total expenses of ₹13,813 crore during the quarter, compared to ₹4,783 crore a year earlier.
Eternal’s division of reporting includes its Indian food ordering operations, quick commerce, Hyperpure supplies (B2B sector), dining out, and other residual segments.
Zomato’s food delivery net order value (NOV) grew by 14 per cent YoY, showing a slight improvement from the 13 per cent YoY NOV growth recorded in the prior quarter.
The NOV for the quick commerce sector surged 137% YoY, hitting a high of ₹11,679 crore, compared to ₹4,928 crore during the equivalent June-September quarter of the prior year. The adjusted revenue for the quick commerce segment skyrocketed by 756 per cent to ₹9,891 crore, up from ₹1,156 crore a year ago.
In a communication to shareholders, Eternal indicated that it anticipates a gradual increase in the growth rate in the short term for Zomato’s food delivery NOV, citing several challenges such as soft discretionary spending, the effects of quick commerce expansion, and increasingly unpredictable weather patterns.
Consistent with this outlook, the NOV growth rate (YoY) experienced an increase in Q2FY26 after a prolonged decline over the previous five quarters. Nevertheless, the rebound in growth has been slower than anticipated, and the company only foresee a gradual increase in the growth rate in the near future.
Opportunity to buy?
Motilal Oswal Financial Services has indicated that their Eternal share price target is ₹410, which suggests a potential increase of 17% from the current price. The decline in fixed deposits has persisted this quarter, and a gradual recovery is anticipated in the near future. The brokerage maintains its BUY rating for the stock, backed by Eternal’s dominance in both Q-commerce and food delivery, alongside the long-term prospects of Blinkit as a significant opportunity in the retail, grocery, and e-commerce sectors. However, significant investments in both Q-commerce and the going-out sector are expected to impact profitability in the short term.
“Quick commerce losses reduction was lower than expected, largely due to higher marketing spends. Management expects growth at a 100% CAGR in Blinkit for next two year. We are tweaking FY26E/27E by -57%/-9% due to lower margin expectations in the near team although faster-than-expected growth. Retain ‘BUY’ with a revised SotP-based target price of ₹400 (from ₹320) as we roll forward to Sep-27E,” said brokerage, Nuvama Institutional Equities.
From a long-term viewpoint, the brokerage firm Axis Direct indicated that Zomato has established a robust business model by securing various strategic verticals and achieving widespread growth. Nonetheless, short-term difficulties, including increased competition and accelerated store expansion, are expected to put pressure on profitability. As a result, the brokerage has maintained a HOLD recommendation and values the stock at ₹360/share using a sum-of-the-parts (SOTP) valuation, suggesting a 3% return from the current market price.
Seema Srivastava, Senior Analyst at SMC Global Securities, believes that despite challenges like soft discretionary spending and GST changes, Eternal remains optimistic, expecting a slow growth uptick and maintaining its 5-6% EBITDA margin guidance. The company’s expansion into new categories and markets, including the UAE, positions it for future growth.
Key Takeaways
Strong revenue growth
Operating revenue surged approximately 183% year-on-year, reaching around ₹13,590 crore. The primary contributor to this growth was the quick-commerce segment (Blinkit), which saw its revenue increase more than seven times to about ₹9,891 crore compared to the previous year. While food delivery revenues also increased, the growth was significantly slower, rising from approximately ₹2,012 crore to ₹2,485 crore year-on-year.
Network & customer expansion
In the second quarter, Blinkit opened 272 new stores, raising the total store count to approximately 1,816. The net order value (NOV) for quick commerce increased by about 137% year over year and roughly 27% quarter over quarter — marking its highest growth in the past ten quarters. For the food delivery sector, NOV experienced a year-over-year rise of around 14%, with margins improving sequentially and reaching a record high for that segment.
Margin & Profitability Pressures
Blinkit’s adjusted EBITDA margin (as a percentage of NOV) increased from –1.8% in Q1 to –1.3% in Q2, though it remains in the negative. The food delivery segment achieved an adjusted EBITDA margin of 5.3% (on an NOV basis), marking its highest performance to date. In the “Going-out” category, NOV experienced approximately 32% year-over-year growth; however, there were still ongoing margin challenges which led to a larger adjusted EBITDA loss. Hyperpure (which focuses on restaurant supplies/B2B) demonstrated consistent growth at around 42% year-over-year, with its adjusted EBITDA loss decreasing and margins improving.
Eternal share price today
Eternal share price today opened at ₹340.30 apiece on the BSE, the stock touched an intraday high of ₹347.75 per share, and an intraday low of ₹333.75 per share.
According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, Eternal share price amidst the quarterly announcement result, stock prices are under tremendous volatility, unlike Thursday after a positive start there was a sharp profit booking from the levels of 370, today post gap down and testing levels around 335 have attempted a bounce back towards 345 (at the time of writing).
“We may continue to see such volatility, where 320 – 310 would be buying zone whereas around 360 – 370 a selling zone,” said Bhosale.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
