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Eternal eyes 100% inventory play for Blinkit to improve margins

EntrackrEntrackr · 2m ago
Eternal eyes 100% inventory play for Blinkit to improve margins
Medial

Eternal eyes 100% inventory play for Blinkit to improve margins Eternal Limited, the company formerly known as Zomato, is gearing up for a strategic shift in its quick commerce arm, Blinkit, by planning to own inventory directly—a move enabled by its recent transition to an Indian-owned and controlled company (IOCC), according to a shareholder letter released by the company. The move will strengthen its operations and improve margins as it faces increased competition from both established players and new entrants in the quick commerce space. Eternal estimates that adopting a 100% inventory model would require less than Rs 1,000 crore in working capital. This amount is only about 5% of Blinkit's expected Net Order Value (NOV) of Rs 22,000 crore for FY25. In response to a question on how a pure-play inventory model could be achieved with Rs 1,000 crore, Eternal’s CFO Akshant Goyal explained that in quick commerce, inventory moves quickly. As a result, the company expects that working capital investments, relative to the overall scale of the business, will remain relatively low. The plan to keep inventory for BlinkIt comes on the back of its aggressive expansion in Q4 FY25, where it added 294 new stores and over 1 million sq ft of warehouse space, pushing its total store count to 1,301. However, such rapid growth led to widening EBITDA losses for Blinkit, from Rs 103 crore in Q3 to Rs 178 crore in Q4 of the last fiscal year (FY25). Even as short-term losses rise, Eternal remains bullish on the long-term profitability of the quick commerce space. The company is not planning private labels for now, but hinted that inventory control could eventually nudge EBITDA margins beyond the 5-6% of NOV it currently targets.

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Eternal bets big on Blinkit as food delivery biz shows signs of slowdown

EntrackrEntrackr · 6d ago
Eternal bets big on Blinkit as food delivery biz shows signs of slowdown
Medial

Eternal bets big on Blinkit as food delivery biz shows signs of slowdown Eternal Ltd. (formerly Zomato) posted a strong Q1 FY26 with revenue surging 70% year-on-year to Rs 7,167 crore. However, growth in its core food delivery business appears to be flattening, with momentum now coming from newer verticals such as Blinkit and Hyperpure. The food delivery segment, once synonymous with Zomato, is beginning to show signs of maturity. Revenue from food grew just 16% year-on-year to Rs 2,261 crore, while Net Order Value (NOV) rose 13%, a slight dip from 14% in the previous quarter. Eternal’s chief executive officer (CEO) Deepinder Goyal acknowledged that “20%+ growth looks unlikely this year,” hinting that the post-COVID boom in food delivery may be tapering off as the business enters a slower growth phase. In contrast, quick commerce is rewriting Eternal’s growth story. Blinkit clocked a 127% YoY jump in NOV and a 154% spike in revenue to Rs 2,400 crore, overtaking food delivery for the first time on a full-quarter basis. The 10-minute delivery app now has 1,544 stores (243 added in Q1 alone) and plans to cross 2,000 by December. So, is India’s food delivery market reaching a saturation point? Goyal doesn’t explicitly say so, but signals are clear: while margins in food delivery are stable (5% of NOV), growth is slowing, and further upside is likely to come from operational efficiencies or adjacent offerings, not explosive user demand. Meanwhile, Blinkit is scaling rapidly, not just in metros, but even in smaller cities where profitability gaps are narrowing. “Margins seem to have bottomed out,” said Blinkit CEO Albinder Dhindsa, adding that select cities are already profitable. The business now has a strong line of sight to 5–6% margin in the long term, according to him. Interestingly, Eternal is now extending its “10-minute promise” to meals with its initiative called Bistro. The service currently runs 38 cloud kitchens across Delhi-NCR and Bengaluru, offering ‘high-quality yet affordable food’ in just 10 minutes. The company sees Bistro as a way to tap into unmet demand, particularly among users seeking low-cost, quick meals or snacky options, a segment it believes traditional food delivery players haven't fully addressed. Hyperpure, Eternal’s B2B restaurant supply business, also had a standout quarter with 89% YoY revenue growth. However, this growth may soften in upcoming quarters as Blinkit transitions from a marketplace to an inventory-led model, reducing Hyperpure’s exposure to non-restaurant clients. To navigate this shift, Eternal is also evolving its leadership structure. With the appointment of product leader Aditya Mangla as food delivery CEO, the company is doubling down on tech-first execution. Goyal calls this “rotational leadership”, a system meant to keep decision-making fresh and avoid long-term stagnation at the top. As Goyal puts it, “We want to build companies led by principles, not personalities.” The principle now seems clear: grow where the consumer moves fastest, and that’s not always dinner delivery. While churn has become a perennial feature at Eternal, both in terms of initiatives and even people, the firm continues to be valued (ridiculously so, many would say) highly for potential upsides on its other initiatives like District etc. However, the grocery business as the growth driver comes with its own challenges on the margin front, as seen in the profit shrinkage this quarter. Patient investors might also feel tested if they don't see either of two things in FY26: profitability in the delivery and grocery business, however low the margins, and a breakout in any of the remaining verticals like seen in Hyperpure.

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