Eternal Stock Slides Post Q3 Results

Online delivery firm Eternal’s stock has come under pressure after its December quarter results, falling nearly 9% over two trading sessions. This has wiped out over $2 billion (₹22,000 crore) in market capitalisation.

The decline may look puzzling at first glance because the company reported profits across its major business lines. But the market reaction suggests investors are looking beyond near-term numbers and focusing on what lies ahead.

The concern is not about what Eternal achieved in the December quarter, but whether it can sustain that performance as competition in quick commerce intensifies.

Why Did Eternal’s Stock Fall Despite Strong Results?

Eternal reported a sharp improvement in profitability during the December quarter. Consolidated adjusted revenue rose 19.5% sequentially to ₹16,692 crore, while adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) jumped 62.5% to ₹364 crore. Net profit climbed 57% from the previous quarter and 73% year on year to ₹102 crore.

A large part of this growth came from Blinkit. The quick commerce arm’s revenue surged to ₹12,256 crore from ₹1,399 crore a year ago, reflecting its rapid scale-up. However, Blinkit added 211 stores during the quarter, taking the total to 2,027, slightly below its internal target of 2,100 stores.

Investors believe this slower-than-planned store expansion may have temporarily boosted profitability by reducing cash burn. Operational challenges during the festive season and pollution-related restrictions in Delhi NCR may have slowed down new store launches. While that helped margins in the short term, it raised questions about how profits will hold up once expansion accelerates.

The market seems to be factoring in tougher days ahead, especially as competition heats up in the quick commerce space.

Will Faster Blinkit Expansion Hurt Profitability Next?

Eternal has maintained its target of 3,000 Blinkit stores by March 2027. Given the competitive landscape, that number could even rise to 3,500 or 4,000 stores. To stay on track, the company might need to significantly step up store additions in the coming quarters.

That push is likely to increase cash burn. Higher discounts, promotional offers, and logistics spending may be needed to defend market share, which could weigh on margins in the near term. Analysts expect Eternal to chase net order value growth of 100% year-on-year, a target that will be hard to meet without aggressive expansion.

Brokerages remain cautious as the sector is still in a land-grab phase, forcing companies to sacrifice margins to gain scale.

How Are Other Businesses Shaping Eternal’s Outlook?

Beyond quick commerce, the food delivery business under the Zomato brand continued its steady recovery. Adjusted EBITDA margin improved to 5.4% as costs are better managed and demand is stable.

The ‘going out’ segment, including dining and events, reported wider losses as investment continues. However, the company expects the losses to narrow sequentially and break even in four to six quarters.

Hyperpure, Eternal’s business-to-business grocery supply arm, saw revenue rise 4.6% sequentially to ₹1,070 crore. The company aims to scale this business to $1 billion in revenue, with a 4–5% adjusted EBITDA margin, over the next three years.

Despite near-term worries, most analysts are optimistic on Eternal, with a potential upside of 14% despite competitive pressures. On January 23, the stock was trading at ₹258.7 on the BSE, with markets closed on Monday for Republic Day.

For investors, the key question now is whether Eternal can balance growth and profitability in an increasingly crowded market.

Sources

Economic Times

Economic Times 2