Eternal Zomato Q1 FY26 Results: Revenue Soars 70%, Profit Dips 90% – Why Shares Are Still Gaining

Eternal Zomato Q1 FY26 Results: Executive Summary

Eternal Ltd., formerly known as Zomato, has presented a paradoxical financial report for the first quarter of fiscal year 2026, ending June 2025. The company demonstrated robust top-line expansion, with consolidated revenue from operations surging by an impressive 70.4% year-on-year. This significant revenue growth was primarily propelled by the stellar performance of its quick commerce arm, Blinkit, which for the first time surpassed the core food delivery business in Net Order Value. Concurrently, however, Eternal’s consolidated net profit experienced a precipitous 90% year-on-year decline, settling at ₹25 crore for the quarter.

Despite this sharp reduction in profitability, the market’s response has been notably positive. Eternal’s share price witnessed a substantial rally, climbing over 7% immediately after the results and extending gains to hit a fresh 52-week high of ₹311.60. This market behavior suggests a fundamental re-evaluation of valuation metrics for high-growth technology companies. Investors appear to be prioritising aggressive top-line expansion, strategic market share capture in nascent but high-potential segments like quick commerce, and long-term strategic positioning over immediate bottom-line figures.

The prevailing sentiment indicates a belief that the current substantial investments are necessary expenditures that will ultimately yield significant future returns and establish enduring market leadership. This reflects a common pattern in the early stages of disruptive digital platform development, where scaling and ecosystem dominance are often seen as precursors to sustainable profitability.

Q1 FY26 Financial Overview: Revenue Surge vs. Profit Contraction

Eternal’s financial performance in Q1 FY26 showcased a stark contrast between its revenue generation capabilities and its short-term profitability. The consolidated revenue from operations reached ₹7,167 crore, marking a substantial 70.4% increase compared to ₹4,206 crore in Q1 FY25. This impressive growth trajectory is part of a consistent pattern, as the company has reported adjusted revenue growth exceeding 50% year-on-year for eleven consecutive quarters.

However, this top-line success was overshadowed by a significant contraction in the bottom line. Consolidated net profit plummeted by 90% year-on-year to just ₹25 crore, a sharp decline from ₹253 crore in the corresponding quarter of the previous year. On a sequential basis, profit after tax (PAT) also saw a 36% decrease from ₹39 crore reported in Q4 FY25. Furthermore, consolidated adjusted EBITDA fell by 42% year-over-year to ₹172 crore.

The primary drivers behind this steep decline in profitability are rooted in elevated investments and rising operational costs, particularly within the rapidly expanding quick commerce (Blinkit) and “going-out” segments. A critical factor contributing to the increased expenditures was a strategic shift in Blinkit’s business model. The company transitioned from operating solely as a marketplace to incorporating an inventory-led model, meaning Eternal now directly purchases, stores, and delivers goods to customers. This fundamental change led to a substantial 129% increase in the cost of goods purchased, rising from ₹1,116 crore to ₹2,557 crore. This model also necessitated higher expenses for warehousing, packaging, and inventory handling.

Beyond direct product costs, advertising and promotion expenses surged by 69% year-on-year to ₹671 crore, reflecting aggressive marketing efforts to capture market share in competitive segments. Delivery expenses also grew significantly, rising by 41% to ₹1,869 crore. Employee benefit costs increased by 57% to ₹830 crore, indicating investments in human capital to support expansion. Additionally, the company’s recent acquisitions from Paytm, including Orbgen Technologies for movie ticketing and Wasteland Entertainment for events, totalling ₹2,014 crore, contributed to integration costs and depreciation expenses. The substantial increase in the cost of goods purchased and warehousing expenses directly reflects Eternal’s strategic decision to transition Blinkit to an inventory-led operation.

This is not merely an increase in operational inefficiency but a deliberate strategic choice aimed at gaining greater control over the supply chain, potentially enhancing product assortment, and capturing a larger share of the value chain in quick commerce. The considerable rise in advertising and delivery costs further underscores an aggressive investment phase focused on market capture within the quick commerce space. This indicates that the decline in profit is a calculated trade-off for establishing dominance and scale in these emerging, high-potential verticals, signalling a long-term play where immediate profitability is secondary to future market leadership.

Table 1: Eternal Consolidated Financials (Q1 FY26 vs. Q1 FY25)

*Note: Q1 FY25 Adjusted EBITDA derived from Q1 FY26 Adjusted EBITDA and YoY change.

Blinkit’s Ascendance: Quick Commerce as the New Growth Engine

The Q1 FY26 results underscore a pivotal shift in Eternal’s business composition, with quick commerce, primarily driven by Blinkit, emerging as the new engine of growth and future value creation.

Segmental Performance Breakdown

• Quick Commerce (Blinkit): This segment demonstrated exceptional growth, with revenue more than doubling by 155% year-on-year to ₹2,400 crore in Q1 FY26, up from ₹942 crore in Q1 FY25. More significantly, Blinkit’s Net Order Value (NOV) surged by 127% year-on-year to ₹9,203 crore, notably surpassing Zomato’s core food delivery NOV of ₹8,967 crore for the first time. Despite this rapid expansion, Blinkit continued to operate at an EBITDA loss of ₹162 crore for the quarter, though this represented an improvement from a loss of ₹178 crore in the previous quarter. Blinkit’s aggressive expansion plans include reaching 2,000 stores by December 2025, having already added 243 new stores in Q1, bringing its total count to 1,544.
• India Food Delivery: While its growth rate was slower compared to Blinkit, the core food delivery business maintained stable performance, with revenue increasing by 16% to ₹2,261 crore. The Adjusted EBITDA margin for this vertical improved to 5.0% of NOV, up from 3.9% a year ago. Monthly transacting customers (MTCs) also saw a healthy increase, reaching 22.9 million from 20.3 million last year. The standalone Zomato India business remained profitable, reporting a net profit of ₹602 crore, a 28% increase.
• Hyperpure (B2B Supplies): This business-to-business vertical generated ₹2,295 crore in revenue, marking an 89% year-on-year increase. However, it posted a loss of ₹5 crore. The company anticipates a temporary de-growth in this segment over the next few quarters.
• Going Out (Dining & Events): This segment saw its revenue more than double to ₹207 crore, but it also reported a loss of ₹48 crore.

Strategic Shift to Inventory-Led Model and Investments

Blinkit’s surpassing of Zomato Food Delivery in Net Order Value (NOV) represents a pivotal moment for Eternal. This development signifies a fundamental re-composition of the business, where quick commerce is now positioned as the primary driver of scale and future value creation. This strategic re-weighting is further reinforced by the ongoing transition of Blinkit’s quick commerce operations from a pure marketplace model to a hybrid approach that includes inventory-led operations. This shift is expected to provide Eternal with greater control over margins and accelerate assortment expansion, enhancing its competitive edge in the quick commerce space.

In line with this strategic direction, Eternal has initiated ‘Bistro’, a 10-minute food delivery service, currently operating with 38 kitchens across Delhi-NCR and Bengaluru. This initiative aims to address an unmet demand for high-quality, low-cost meals and quick snacks. To further explore and expand into parallel commerce models, including cooked food delivery, a new subsidiary, Blinkit Foods Pvt Ltd, has been incorporated. The continued losses observed in Blinkit and Hyperpure, despite their impressive revenue growth, are not indicative of operational failures. Instead, they represent calculated investments designed to secure market leadership in these high-potential, yet intensely competitive, segments.

The marginal improvement in Blinkit’s loss, even amidst aggressive expansion, suggests a deliberate and managed path towards future profitability. This comprehensive approach indicates a long-term vision to build an integrated “instant commerce” ecosystem, leveraging shared logistics and a vast user base across various digital commerce verticals.

Table 2: Segmental Revenue and Net Order Value (NOV) Performance (Q1 FY26)

*Note: NOV for Hyperpure, Going Out, and Others is not explicitly provided in the snippets as they are not B2C segments in the same way. Total Operating Profit before tax and overheads is ₹325 crore.

Market Reaction: Share Price Rally and Investor Sentiment

Following the announcement of its Q1 FY26 results on July 21, 2025, Eternal’s shares experienced significant positive momentum. On the day of the announcement, the stock surged over 7%, closing at ₹276.50 apiece on the NSE. This upward trend continued into July 22, with the share price jumping an additional 9-10% to reach a fresh 52-week high of ₹311.60 on the BSE and ₹311.25 on the NSE. As of July 22, 2025, the share price stood around ₹297.6. Over the past six months, the stock has delivered substantial returns, increasing by over 30%, and by over 9% in the last month alone.

This strong market reaction, despite the pronounced decline in net profit, is largely attributed to the robust revenue growth, particularly driven by Blinkit’s exceptional performance and its emergence as Eternal’s new primary growth engine. Financial analysts largely perceive the strong top-line expansion and Blinkit’s momentum as factors that outweigh the short-term profit contraction, viewing the latter as a necessary consequence of strategic investments.

Several brokerages revised their outlooks upwards. Morgan Stanley, for instance, raised its target price for Eternal to ₹320, citing “limited dilution risk” and strong margin potential within Blinkit. JM Financial reiterated its ‘Buy’ rating, maintaining an unchanged target price of ₹320, based on the conviction that Blinkit’s positive contributions would compensate for any underperformance in other business segments. Overall, at least ten brokerages increased their price targets, and four upgraded their ratings, pushing the median price target to ₹311. Technical analysis also indicated strong buying interest, with the stock maintaining positions above key moving averages, suggesting a bullish trend. While some analysts suggested accumulating the stock on pullbacks towards ₹272-274 for near-term targets of ₹320 and ₹356, others anticipated some profit-booking after the sharp rally.

The sustained positive market reaction, despite a significant profit decline, reveals a sophisticated understanding among investors of growth equity dynamics. It implies that the market is not solely focused on current profitability but is actively incorporating the future value of market leadership and ecosystem expansion in high-growth digital segments into its valuations. This suggests that investors are willing to finance aggressive, loss-making expansion in quick commerce, viewing it as a long-term strategic asset that is expected to eventually yield substantial returns, much like how early-stage e-commerce or ride-hailing platforms were valued. The consistent analyst upgrades and raised price targets further validate this forward-looking, growth-centric valuation model, indicating that professional investors are aligning with this strategic narrative.

Table 3: Eternal Share Price Performance and Key Valuation Metrics (as of July 22, 2025)

Trending Conversations on X and Google: Decoding Public and Investor Interest

The immediate public and investor engagement with Eternal’s Q1 FY26 earnings was evident in the trending conversations across social media platforms and search engines. On X (formerly Twitter), the dominant discussions and hashtags revolved around “#Zomato,” “#Eternal,” “#Blinkit,” “#Q1Results,” “#SharePrice,” “#StockMarket,” “#QuickCommerce,” and “#EarningsReport”. These conversations frequently highlighted the dichotomy between the robust revenue growth and the sharp decline in net profit, with a significant positive emphasis placed on Blinkit’s performance and its new status as the leading segment by Net Order Value.

Beyond the financial figures, the news surrounding Zomato CEO Deepinder Goyal’s clarification about not having purchased a private jet also trended, indicating a broader public interest in the company’s leadership and corporate image, albeit tangential to the quarterly results.

On Google, search queries closely mirrored investor and public interest in understanding the financial implications. Key search terms included “eternal zomato q1 results,” “zomato share price,” “eternal share,” “zomato news,” “zomato results,” and “money control” [User Query]. These searches reflect a direct pursuit of factual financial data and immediate market reactions.

The overall sentiment on X regarding the Q1 results appears predominantly positive, aligning with the bullish market response. Discussions frequently celebrated Blinkit’s “blitz” and its transformation from an “underdog” to a primary driver of the company’s top line. While there was an acknowledgement of the “side of caution” due to shrinking profits and rising costs, the narrative of growth and strategic expansion largely dominated the public discourse. Mentions such as “Zomato is evolving, from a food delivery pioneer to a serious player in quick commerce” underscore a shift in public perception that aligns with Eternal’s strategic direction. Deepinder Goyal’s emphasis on a “dissatisfied” culture, where teams “rarely celebrate wins” and focus on continuous problem-solving, likely resonated positively with a tech-savvy audience, implying an organisational commitment to ongoing innovation.

The convergence of trending topics on X and Google searches with the financial results and market reaction underscores the immediate and widespread public and investor engagement with corporate earnings. The prominence of “Blinkit growth” in these discussions, often overshadowing the profit decline, reflects a public narrative heavily influenced by high-growth, disruptive business models. This indicates that social media sentiment, particularly among retail investors and tech enthusiasts, tends to prioritise a compelling growth story and strategic vision over traditional profitability metrics in the short term. This phenomenon highlights the power of a strong growth narrative in shaping public perception, even when immediate financial setbacks are present.

Table 4: Top Trending Topics and Keywords (X & Google)

Strategic Outlook and Future Implications

Eternal’s management has articulated a clear strategic vision, expressing confidence in the long-term profitability of the quick commerce business. They note that some cities within the Blinkit network are already achieving over 2.5% Adjusted EBITDA margin, signalling a path towards broader profitability. Deepinder Goyal, Eternal’s CEO, has indicated that the year-on-year growth for the food delivery segment is likely to “bottom out now” and is expected to recover, with a target of “north of 15% and hopefully trending towards 20% YoY growth in FY27”.

Goyal also highlighted the company’s distinctive “dissatisfied” culture, where teams are encouraged to “rarely celebrate wins, keep a low profile, and believe in the 1% done philosophy,” emphasising a relentless focus on continuous problem-solving for customers. This operational philosophy, centred on continuous improvement and innovation, serves as a non-financial asset that underpins Eternal’s aggressive expansion and its ability to navigate highly competitive market landscapes.

The company’s strategic roadmap includes several key initiatives designed to consolidate its position and drive future growth. The incorporation of Blinkit Foods Pvt Ltd as a new subsidiary underscores Eternal’s intent to explore parallel commerce models, including cooked food delivery, further expanding its ecosystem. This initiative builds upon their ‘Bistro’ 10-minute food delivery service, which currently operates 38 kitchens in Bengaluru and Delhi-NCR, aiming to address previously unmet demand for high-quality, low-cost meals and quick snacks.

Eternal is also actively transitioning its quick commerce business to an inventory ownership model over the next two to three quarters. While this shift is expected to increase Net Working Capital, the company anticipates that it will be balanced by a decline in Hyperpure’s Net Working Capital, demonstrating a sophisticated approach to capital allocation across its diverse portfolio. This disciplined management of financial efficiency and liquidity across segments is a positive indicator for long-term sustainability. Furthermore, Blinkit plans to significantly expand its physical footprint, aiming to reach 2,000 stores by December 2025.

In terms of leadership, Eternal has introduced a ‘Rotational Leadership’ model, with Aditya Mangla taking the helm of the Zomato business for the next two years, a move intended to bring fresh perspectives and accelerate execution. The company has also launched ‘Greening India’, an agroforestry initiative to plant over 2.5 million trees, aligning with its broader environmental goals.

These strategic moves and the management’s commentary indicate that Eternal is not merely pursuing opportunistic growth. Instead, it is executing a well-defined, long-term strategy to build a diversified and integrated commerce platform. The company’s philosophy and operational details suggest an organisation that is both ambitious in its expansion and disciplined in its financial management, a crucial combination for maintaining investor confidence in a high-growth, high-investment environment.

Overall Sentiment

Eternal’s Q1 FY26 results clearly illustrate a company undergoing a significant strategic transformation, where the aggressive pursuit of growth and market leadership in the burgeoning quick commerce sector is taking precedence over immediate consolidated profitability. The substantial decline in net profit directly stems from considerable investments in Blinkit’s expansion, its strategic shift to an inventory-led model, and increased expenditures on advertising and delivery.

The overwhelmingly positive market reaction, evidenced by a surging share price and bullish analyst outlooks, underscores a strong belief in Blinkit’s long-term potential as Eternal’s new primary growth engine. This market behavior indicates that investors are valuing the company based on its projected future revenue streams and its potential to achieve market dominance in quick commerce, rather than solely on its current bottom-line figures.

The ongoing strategic initiatives, including the rapid expansion of Blinkit’s dark store network, the introduction of Blinkit Foods and Bistro, and a disciplined approach to capital allocation across its diverse business segments, collectively point to a clear and ambitious strategic roadmap. While short-term profitability may continue to face pressure due to these sustained investments, Eternal appears committed to constructing a comprehensive “instant commerce” ecosystem. This strategy involves leveraging the established profitability and cash generation of its core food delivery business to fund its high-growth ventures.

The trending conversations on social media platforms like X and popular search engines such as Google further reinforce this narrative, with public and investor interest predominantly centred on Blinkit’s impressive growth trajectory and the company’s evolving strategic direction. Eternal’s success in navigating the dynamic market landscape will ultimately depend on its ability to effectively balance aggressive expansion with operational efficiency and sustained innovation, thereby converting its current growth momentum into long-term, sustainable profitability across its diversified portfolio.

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