In the fast-evolving world of e-commerce and food delivery, Eternal Ltd., the parent company of Zomato and Blinkit, has once again captured the spotlight with its Q1 FY26 financial results. Released on July 21, 2025, after market hours, these results triggered a remarkable surge in Eternal’s share price, with a staggering 13% jump on July 22, 2025, and a new all-time high of ₹311.25. The standout performer? Blinkit, Eternal’s quick commerce arm, which outshone Zomato’s food delivery unit in revenue generation for the first time, signaling a potential shift in consumer preferences and market dynamics. This article dives deep into Eternal’s Q1 performance, the rise of Blinkit, the impact on share prices, and what this means for the future of quick commerce in India.
Eternal Q1 FY26 Financial Performance: A Tale of Growth and Challenges
Eternal Ltd. reported a consolidated revenue of ₹7,167 crore for the June 2025 quarter, marking an impressive 70.4% year-on-year (YoY) growth compared to ₹4,206 crore in Q1 FY25. This robust top-line performance underscores the company’s ability to scale its operations across its diverse portfolio, which includes food delivery, quick commerce, and B2B supply chain solutions. However, the picture isn’t entirely rosy. The company’s net profit plummeted by 90% YoY to ₹25 crore from ₹253 crore in the same quarter last year, reflecting the high costs associated with rapid expansion and investments in infrastructure.
The adjusted EBITDA for the quarter stood at ₹115 crore, down 35% YoY, highlighting the pressure on profitability due to increased operating expenses. Despite the profit dip, the market responded enthusiastically, driven by optimism around Eternal’s strategic focus on quick commerce and its long-term growth potential. The company’s cash balance remained strong at ₹18,857 crore, marginally up from ₹18,825 crore in Q4 FY25, even after significant capital expenditure on Blinkit’s dark store expansion.
Key Financial Highlights
- Revenue Surge: ₹7,167 crore, up 70.4% YoY, driven by strong growth in quick commerce and food delivery segments.
- Net Profit Decline: ₹25 crore, down 90% YoY, due to higher operating costs and investments in Blinkit.
- Adjusted EBITDA: ₹115 crore, reflecting a 35% YoY decline, signaling margin pressures.
- Cash Reserves: ₹18,857 crore, providing a solid foundation for future growth initiatives.
Blinkit Outpaces Zomato: A Quick Commerce Revolution
The most striking revelation from Eternal’s Q1 results was the performance of its quick commerce arm, Blinkit, which surpassed Zomato’s food delivery unit in revenue for the first time. Blinkit recorded a revenue of ₹2,400 crore, a phenomenal 155% YoY increase from ₹942 crore in Q1 FY25. In contrast, Zomato’s food delivery revenue grew by a modest 10% YoY to ₹2,261 crore. This shift marks a pivotal moment for Eternal, as Blinkit’s net order value (NOV) also overtook Zomato’s, reaching ₹11,820 crore with a 140.1% YoY growth in gross order value (GOV).
The rise of Blinkit reflects a growing consumer preference for rapid grocery delivery, with delivery times as short as 10–20 minutes for essentials like vegetables, dairy, and household items. This trend is reshaping India’s e-commerce landscape, where convenience and speed are becoming paramount. Eternal’s B2C businesses collectively achieved a NOV of ₹20,183 crore, up 55% YoY, with quick commerce accounting for nearly half of the annualized NOV of $10 billion.
Why Blinkit Is Stealing the Show
- Rapid Delivery Appeal: Consumers are increasingly favoring quick commerce for its speed and convenience, driving demand for instant grocery deliveries.
- Dark Store Expansion: Blinkit added 243 new stores in Q1 FY26, bringing its total to 1,544, enhancing its reach and operational scale.
- First-Party (1P) Model: Blinkit’s shift to a 1P model, where it procures and delivers products directly, allows better control over margins and pricing, boosting revenue potential.
Share Price Surge: Market Confidence in Eternal’s Growth Story
Eternal’s share price soared following the Q1 results, climbing 13% intraday on July 22, 2025, and hitting a 52-week high of ₹311.25. By 11:40 AM, the stock was trading at ₹296.10, up 9% for the day. Over the past five days, the stock gained 12%, and in the last month, it delivered a 16% return. Over six months, Eternal’s shares have provided investors with over 40% returns, underscoring strong market confidence in the company’s growth trajectory.
The rally was fueled by positive management commentary and brokerages’ bullish outlook on Eternal’s quick commerce segment. Despite the sharp profit decline, investors focused on the stabilization of Blinkit’s losses and the potential for improved margins through the 1P model. The stock’s performance also propelled Eternal’s market capitalization past ₹3 trillion, making it a top performer on the Nifty 50 and BSE Sensex.
Share Price Performance Metrics
- Daily Gain: Up 13% intraday on July 22, 2025, with a closing price of ₹276.50, a 7.5% increase.
- 52-Week High: ₹311.25, reflecting strong investor optimism.
- Short-Term Returns: 12% in 5 days, 16% in 1 month, and over 40% in 6 months.
- Market Cap Milestone: Crossed ₹3 trillion, cementing Eternal’s position as a market leader.
Brokerage Reactions: Bullish Targets and Optimistic Outlooks
Leading brokerages responded to Eternal’s Q1 results with upgraded price targets and positive ratings, reflecting confidence in the company’s long-term potential. Here’s a breakdown of their analyses:
Jefferies: Buy Rating with ₹400 Target
Jefferies issued a “Buy” rating with a target price of ₹400, implying a 36% upside from the current price of around ₹300. The brokerage highlighted Blinkit’s robust growth and the shift to the 1P model as key drivers of future profitability.
Bernstein: Outperform with ₹320 Target
Bernstein maintained an “Outperform” rating with a revised target price of ₹320, citing Blinkit’s 140% YoY GOV growth and lower-than-expected EBITDA losses. The brokerage sees Eternal as a top pick due to its leadership in quick commerce and improving unit economics.
CLSA: High Conviction Outperform with ₹385 Target
CLSA expressed strong confidence in Blinkit’s potential, assigning a “High Conviction Outperform” rating with a target price of ₹385. The brokerage views quick commerce as a transformative business model with significant growth opportunities.
Nuvama Institutional Equities: Buy with ₹320 Target
Nuvama raised its target price from ₹290 to ₹320, maintaining a “Buy” rating. The brokerage emphasized Blinkit’s shift to the 1P model and its valuation of both Zomato and Blinkit at $16 billion each, reflecting their equal importance to Eternal’s portfolio.
Macquarie: A Cautious Note
While most brokerages were bullish, Macquarie maintained an “Underperform” rating with a target price of ₹150, citing concerns over competitive pressures and prolonged losses in the quick commerce segment. However, this bearish outlook was overshadowed by the broader positive sentiment.
The 1P vs. 3P Model: A Strategic Shift for Blinkit
A key factor driving Blinkit’s success is its transition from a third-party (3P) model to a first-party (1P) model. In the 3P model, Blinkit acted as a platform connecting customers with third-party sellers, earning a commission. In contrast, the 1P model involves Blinkit purchasing products directly and delivering them to customers, allowing greater control over pricing, inventory, and margins.
This strategic shift has several advantages:
- Margin Control: The 1P model enables Blinkit to optimize pricing and improve profitability.
- Customer Experience: Direct inventory management ensures faster delivery and better product quality.
- Scalability: The model supports Blinkit’s ambitious plan to open 3,000 dark stores in the next 2–3 years, expanding its reach to Tier 2 and Tier 3 cities.
However, the transition also increases working capital requirements, as Eternal invests heavily in inventory and logistics infrastructure. The company’s management remains optimistic, projecting that the 1P model will improve operating margins in the long term, particularly as Blinkit scales its operations.
Blinkit’s Expansion Plans: Targeting Tier 2 and Tier 3 Cities
Blinkit’s aggressive expansion strategy is a cornerstone of Eternal’s growth plan. The company added 243 new dark stores in Q1 FY26, bringing its total to 1,544. These dark stores, strategically located micro-warehouses, enable Blinkit to fulfill orders within minutes, catering to the growing demand for instant delivery. Eternal aims to reach 2,000 stores by December 2025 and 3,000 stores within 2–3 years, with a focus on penetrating Tier 2 and Tier 3 cities.
This expansion is critical for capturing the untapped potential of smaller cities, where digital adoption and discretionary spending are rising. By leveraging its 1P model and dark store network, Blinkit aims to redefine quick commerce in India, offering unparalleled convenience to a broader customer base.
Expansion Highlights
- Current Store Count: 1,544 dark stores as of Q1 FY26.
- Target: 2,000 stores by December 2025, 3,000 stores in 2–3 years.
- Geographic Focus: Expanding into Tier 2 and Tier 3 cities to tap into new markets.
- Capex Investment: ₹310 crore in Q1 FY26 for dark store and warehouse expansion, with ₹60 crore for Bistro kitchens and IT infrastructure.
Bistro: A New Frontier for Blinkit
Eternal is also innovating within its quick commerce segment through Bistro, a delivery service featuring kitchens owned and operated by Blinkit. Currently, 38 Bistro kitchens are live in Delhi-NCR and Bangalore, targeting two underserved demand segments:
- Customers seeking high-quality, low-cost meals (similar to home-cooked food).
- Customers looking for quick, snacky food delivered in 10 minutes.
Early data suggests strong customer traction, with Bistro generating incremental demand without cannibalizing Zomato’s food delivery business. However, Eternal acknowledges the need to refine the business model to achieve profitability, as Bistro’s current operations are capital-intensive.
Challenges Ahead: Margin Pressures and Competition
Despite the positive market response, Eternal faces significant challenges. The 90% drop in net profit reflects the high costs of Blinkit’s expansion and the transition to the 1P model. Operating expenses, including logistics and advertising, have surged, putting pressure on margins. The food delivery segment, while stable, saw a modest 10% YoY revenue growth, indicating slower momentum compared to quick commerce.
Competition is another concern. The quick commerce space is becoming increasingly crowded, with players like Swiggy Instamart and Zepto vying for market share. Macquarie’s cautious outlook highlights the risk of prolonged losses if competition intensifies. Additionally, Eternal’s shift to inventory ownership increases working capital needs, which could strain finances if not managed carefully.
Key Challenges
- Profitability: High operating costs and investments in Blinkit are impacting margins.
- Competition: Rivals like Swiggy and Zepto are intensifying competition in quick commerce.
- Capital Intensity: The 1P model and dark store expansion require significant upfront investment.
The Future of Quick Commerce: Is Blinkit the Game-Changer?
The rise of Blinkit signals a broader shift in consumer behavior, with Indian customers prioritizing speed and convenience in their purchasing decisions. The success of quick commerce reflects the growing demand for instant gratification, whether for groceries, household essentials, or snacks. Eternal’s strategic pivot to the 1P model and its aggressive store expansion plan position it as a leader in this space, but the company must balance growth with profitability to sustain investor confidence.
Analysts like Sachdeva from SS WealthStreet argue that Eternal is well-poised to capitalize on rising digital adoption, an expanding urban millennial base, and increasing discretionary spending. The company’s robust order volumes, improving unit economics, and consistent margin improvements in food delivery provide a strong foundation for future growth. However, the path forward will require careful execution to navigate competitive pressures and operational challenges.
Why Quick Commerce Matters
- Consumer Trends: Growing preference for 10–20-minute deliveries for groceries and essentials.
- Market Potential: India’s quick commerce market is projected to grow rapidly, driven by urbanization and digital adoption.
- Eternal’s Edge: Leadership in quick commerce, backed by a strong cash balance and strategic investments.
Investment Outlook: Should You Buy Eternal Shares?
Eternal’s Q1 results have sparked renewed interest among investors, with the stock’s 40% return over six months and bullish brokerage targets making it an attractive option. The company’s leadership in quick commerce, coupled with its diversified portfolio (Zomato, Blinkit, Hyperpure, and District), positions it for long-term growth. However, the sharp profit decline and competitive risks warrant caution.
For investors with a high-risk tolerance, Eternal offers significant upside potential, particularly if Blinkit continues to scale and improve margins. Those seeking stability may prefer to wait for clearer signs of profitability. As always, consult with certified financial advisors before making investment decisions.
Investment Considerations
- Upside Potential: Brokerage targets of ₹320–₹400 suggest 10–36% upside from current levels.
- Risk Factors: Margin pressures, competition, and high capital expenditure.
- Long-Term Outlook: Strong growth trajectory driven by quick commerce and digital adoption.
Conclusion: Eternal’s Bold Bet on Quick Commerce
Eternal Ltd.’s Q1 FY26 results highlight its transformative journey from a food delivery giant to a quick commerce powerhouse. Blinkit’s breakthrough performance, surpassing Zomato in revenue and NOV, underscores the rising importance of rapid delivery in India’s e-commerce ecosystem. While profitability challenges persist, the market’s enthusiastic response and bullish brokerage outlooks reflect confidence in Eternal’s long-term vision.
As the company scales its dark store network, refines its 1P model, and explores new ventures like Bistro, Eternal is redefining the future of online commerce. For investors and industry observers alike, the question is no longer whether quick commerce is the future but how Eternal will shape it. Stay tuned for more updates on Eternal’s journey, and visit moneycontrol.com for the latest business and personal finance news.