Eternal Ltd Q4 FY2025 Concall Summary

Key Takeaways

• Competition is the quarter's story, and it is not easing: Margin expansion that would have been expected is absent, and management sees no reduction in competitive intensity, calling price action "way more competitive" than prior quarters.
• Blinkit holds share but at a cost: Market share is more or less maintained, yet contribution margin stayed flat only because competition made every part of the business more expensive, from last-mile delivery to real estate.
• Food delivery stays on its 20%+ growth track, though a temporary rider shortage, driven by rapid e-commerce expansion, added operational friction.[14-15]
• Experiments are being pruned: Zomato Everyday is shutting down, the "Quick" 10-minute delivery attempt is dead, and a call on the Hyperpure non-restaurant B2B business is due within weeks.
• What to watch next quarter: Whether competitive intensity finally shows any directional change, the shareholder vote on foreign ownership and its implications for the inventory model, and the decision on Hyperpure's B2B future.

Competitive Intensity

• Margin pressure is the visible scar: The impact of competition shows up in the lack of significant margin expansion that would have otherwise been expected, as more players compete for the same customers across categories.
• Price aggression persists: Competition was "way more competitive in terms of price action" in Q3FY25, and that elevated intensity continued through Q4 with no meaningful directional change seen so far.
• Costs are rising everywhere: Every part of the business has become more expensive: last-mile delivery, marketing costs, and real estate, where significant competition for the same locations exists in most cities.
• Blinkit's flat margin hides the damage: Contribution margin remaining flat does not mean competition eased; in a business where stores break even in months, those stores would be fairly profitable by now without the competitive drag.
• Demand is not yet cracking: Management is not seeing a loss of customer wallet share in existing areas where store density is rising due to competition.

Dhindsa: "The impact of competition is visible in the lack of significant margin expansion that we would have otherwise expected."

Quick Commerce (Blinkit)

• Market share defended: Even with new competition entering, Blinkit has more or less maintained its market share over the last few quarters.
• Store expansion is tilting smaller: An incrementally larger portion of new store openings is happening in non-top-eight markets, though management declined to share specific city counts.
• Profitability path is a long game: Management is not thinking about goals in terms of just reaching breakeven; the long-term ambition is to solve for much higher profitability than that, and near-term contribution margin is too affected by seasonality and competition to guide.
• Same-day delivery looms as a future threat: Amazon and Flipkart are now delivering many products same-day in 4-6 hours, which management acknowledges will compete with quick commerce at some point.

Goyal: "Just getting to breakeven is not enough anyway. So long term, we have to solve for much higher profitability than just that."

Food Delivery

• Growth guidance intact: The 20%+ growth guidance for food delivery remains in place, and Q1FY26 is trending seasonally better and as per expectations so far.
• Rider supply tightened: A temporary supply-demand mismatch emerged from rapid e-commerce expansion over the last 3-4 months, compounded by a summer supply crunch and quick commerce growth across the board; supply is expected to catch up with some lag over the medium to long term. [11-12][14-15]
• "Quick" experiment killed: The attempt to bring delivery time from ~30 minutes to 10 minutes was shut down after management realized it was extremely hard with no incrementality in demand and poor customer experience. Focus now shifts to bringing 30-minute delivery down to 20-25 minutes through logistic fleet efficiency.
• Subscription model not on the radar: On Rapido's subscription model, management will wait and watch, noting it is not clear how that model makes sense in the long run; on its own potential subscription model, the company has no point of view.

Portfolio & Experimentation

• Zomato Everyday shut down: The business was doing well in its markets and could make money, but given its overall size, it would not move the needle for food delivery; it is a more operational-intensive, different business model.
• Bistro and Nugget are separate bets: Bistro is not part of food delivery and will be reported separately even if it scales; all new initiative costs and losses, including Bistro, Nugget, and other B2B experiments, sit in the 'Others' segment, where losses could remain high for some time.
• Hyperpure B2B decision imminent: A call on whether to continue building the non-restaurant B2B business will be taken in the next few weeks, depending on shareholder approval for the foreign ownership resolution.
• Inventory model evaluation on hold: Management has not yet evaluated the inventory model; once shareholder approval is received, it will start assessing whether to go down that path.

Strategic Positioning

• Private label is a deliberate pass: The company works with brands and believes they are better equipped to create and sell products; Zomato wants to be in the platform business it does best.
• GOV to NOV shift reflects business mix: The NOV metric was introduced because the business is moving more toward categories where GOV gives an incorrect picture; the category-wise NOV-to-GOV ratio ranges from 70% to 80%.
• Going-out investment cycle continues: The business is expected to remain at -2% to -2.5% Adjusted EBITDA in the near term while investing in the customer transition to the District app and supply creation; profitability is not expected in that timeframe, which spans the next year or so.

Dhindsa: "We work with a lot of brands, and we feel that they are better equipped to create and sell products that customers need. We would like to be in the business that we do best, which is operating as a platform."

Guidance & Commitments

Key Metrics