Eternal Ltd Q2 FY2025 Concall Summary

Key Takeaways

• Blinkit expansion reshapes the mix: Delhi NCR share fell from ~47% to below 40% as new cities ramp, dragging the blended take rate and contribution margin while older cohorts keep growing GOV.
• Quick commerce margin path is now explicit: Management sees a 4–5% Adjusted EBITDA margin as realistic and achievable, even as fixed costs below contribution rise meaningfully quarter on quarter.
• \$1 bn fundraise is a balance-sheet move, not a strategy shift: The board passed an enabling resolution; actual size depends on market conditions, and management explicitly ruled out using the capital to increase discounting.
• Food delivery steady, no slowdown signal: 20%+ GOV CAGR guidance reaffirmed, with no visible impact from an economic or consumption slowdown, though management is watching.
• What to watch next quarter: Early data from the District app launch, whether new Blinkit stores begin converting the take-rate and contribution-margin drag into expansion, and any update on tier-2 city unit economics once management is ready to share.

Blinkit Expansion & Mix Shift

• Geographic rebalancing underway: Delhi NCR share of Blinkit business has dropped from ~47% to less than 40% as the company prioritizes building out markets beyond its home base; by GOV, Blinkit is already the largest player in all major metros outside Chennai and Hyderabad.
• AOV holds across cities: AOVs are similar across the top 7–8 cities, and one or two markets outside Delhi may even have higher AOV. The narrative that AOV would shrink in non-Delhi NCR cities is not playing out in Blinkit's business.
• New stores dilute take rate: The majority of the take-rate impact comes from the higher velocity of new store openings. New stores take time to ramp up, so take rates increase over time; with the mix of new stores rising, the overall take rate sees a slight decrease.
• Contribution margin stalled by fixed-cost drag: When new stores open, fixed costs for personnel, rentals and other expenses are incurred before the store becomes fully operational. These costs sit above contribution, which is why contribution margin has not expanded in the last 2–3 quarters.
• Older cohorts still growing: Quick commerce GOV per month continues to rise for older customer cohorts, and in Delhi NCR new customers are being acquired at AOVs comparable to existing ones.
• Store throughput expected to hold: Despite continued store rollouts, management expects throughput per store to remain stable.

Albinder Singh Dhindsa: "The way that quick commerce works is that customers are primarily using it for urgent use cases. Even in categories with slightly higher AOVs, we don't see that much of an upward increment in terms of AOVs for those use cases because customers are not making really high involvement purchases on the platform."

Quick Commerce Economics & Margin Path

• 4–5% Adjusted EBITDA margin now the explicit target: Management stated that with every passing quarter, this range seems more realistic and achievable.
• Fixed costs rising meaningfully below contribution: Marketing, server, people and infrastructure costs have all been increasing quarter on quarter, driven by quick commerce, Going-out and Hyperpure, three high-growth businesses. In food delivery, marketing spend varies quarter to quarter while people, rental and infrastructure costs are quite stable.
• Take-rate fluctuation is seasonal, not structural: Management attributed the moderation to seasonality and mix changes from quarter to quarter based on the types of restaurants people order from, since different restaurant types carry different take rates.
• AOV benefits from assortment and seasonality: AOV increases during the rainy season because capacity gets crunched, and it also benefits from a steadily increasing range and growing number of use cases, especially in non-Delhi markets where assortment has expanded. Structurally, customers do not make high-involvement purchases on the platform, so upward AOV movement is limited.
• Quick commerce audience is broadening: The overlap between quick commerce and food delivery audiences is decreasing over time because quick commerce appeals to a much wider demographic. In like-for-like neighborhoods, the overlap is reducing.

Fundraise: Purpose & Guardrails

• Enabling resolution, not a committed raise: The board passed a resolution to raise up to \$1 billion, subject to shareholder approval. The actual size will depend on demand and market conditions, and management provided no specific math behind the \$1 billion figure.
• Discounting explicitly ruled out: Management stated the fundraise is purely to strengthen the balance sheet and that discounting is not going to help the business at this point in time.
• No strategy change: The fundraise will not dictate or influence how the business is run, and existing guidance remains unchanged.
• Inventory restriction noted: Under the current shareholding structure, Zomato cannot own inventory in dark stores.

Akshant Goyal: "We're not raising money to start discounting more. We need do what is right for the business first, and we don't think that discounting is going to help our business at this point in time. The fundraise is purely to strengthen the balance sheet, and for nothing else."

Food Delivery: Steady, No Alarm

• No visible slowdown impact: Management sees no noticeable impact on the food delivery business from an economic or consumption slowdown, though it is watching the situation.
• 20%+ GOV CAGR reaffirmed: Management corrected an analyst's premise about a 30% sustainable growth ambition, stating the guidance has always been 20%+ GOV growth on a CAGR basis over the next few years and calling the higher figure a misunderstanding.
• Tax expense is on treasury income, not operations: Unabsorbed depreciation has run out, so tax this quarter applies to treasury income. Profit from operations is still being offset by carry-forward losses, which will continue for a couple of years before tax on operating income is needed.

New Initiatives: District App & Beyond

• District app launching in weeks: The new going-out app will house the dining-out business, run for the last two years, and the newly acquired entertainment ticketing business. For the foreseeable future, focus will remain on building in these categories.
• No rushed customer migration: Management is not in a hurry to transition every customer from existing Zomato and Paytm platforms to District. There is no pressing need to do it in one shot or to spend inordinately more than necessary.
• Delivery-time experiments ongoing: Directionally, the company is focused on bringing down delivery times, but it is too early to point to one answer showing strong product-market fit. Experimentation will continue.
• Private labels not on the table now: Management is not considering private labels at this point but will continue to evaluate.

Akshant Goyal: "We are not in a hurry to actually transition every customer from the existing Zomato and Paytm platforms to the District app. There is no pressing need, therefore, to do it in one shot or to spend inordinately more than what we need to."

Competitive Posture & Information Gaps

• Competition acknowledged, focus internal: Management said the business is still nascent with parts not fully built out yet, and the focus remains on problem-solving rather than market-share dynamics. When asked about ensuring a fair share of new quick-commerce customers, management deflected, noting the business is growing over 120–130% YoY and operating at full capacity.
• Several metrics withheld as competitive: Management declined to share SKUs per order, operating metrics for lower-tier cities versus tier-1 cities, and loyalty-program plans, citing competitive sensitivity and the fact that the tier-2 business is still young and being learned.
• Loyalty programs ruled out for now: When asked about loyalty programs for quick commerce, management responded, "Not at this point."

Akshant Goyal: "We're focused on our own business. While competition is increasing and the business is evolving, it's still nascent, and there are parts that are not fully built out yet where we need to problem-solve."

Guidance & Commitments

Key Metrics