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Eternal Ltd Grants 7.4 Million Stock Options to Employees at ₹1
Eternal Limited has approved the grant of 7,418,741 stock options to its employees, with an exercise price set at a nominal ₹1 per option.
Grant Details Announced
Eternal Limited, previously Zomato, announced on April 1, 2026, through its Nomination and Remuneration Committee, the approval of 7,418,741 stock options for employees. These options fall under the company's ESOP 2014, ESOP 2021, and ESOP 2024 plans. The grant covers 7,673,303 equity shares, potentially subject to adjustments. Each option can be converted into one equity share of ₹1 face value, with a ₹1 exercise price.
Purpose: Employee Motivation and Retention
The substantial stock option grant is designed to motivate employees, cultivate a feeling of ownership, and improve retention at Eternal Limited. This move aims to align employee interests with the company's long-term performance and growth objectives, fostering a stronger commitment to its success.
Shareholder Perspective: Dilution Concerns
For existing shareholders, the exercise of these options will result in the issuance of new equity shares. This could lead to a dilution of their ownership stake and earnings per share (EPS). The extent of this dilution will depend on how many options are ultimately exercised and when.
Company Context: Profitability and Competition
Eternal Limited, rebranded from Zomato Limited in early 2025, operates a broad digital commerce platform. The company frequently uses ESOPs to reward and retain employees, having issued substantial grants, often with a ₹1 exercise price, in past years. Following a focus on growth, Eternal achieved its first full year of profitability in FY25. This was driven by gains in its food delivery segment and lower losses in quick commerce. The quick commerce market remains highly competitive, and the company's high valuation requires consistent strong performance.
Key Risks to Monitor
- Share Dilution: A large number of option exercises could dilute existing shareholders' ownership and EPS.
- Employee Retention: The success of ESOPs in retaining talent depends on future company performance and stock appreciation.
- Valuation Pressure: The company's current high market valuation means any execution missteps could lead to stock price declines.
Industry Peer Practices
Stock options are a common retention tool across the Indian tech sector, seen in companies like Infosys and TCS. Rivals in the food delivery space, such as Swiggy, also frequently use ESOPs. Peers in the broader quick service restaurant (QSR) and delivery market, including Jubilant FoodWorks and Devyani International, compete in a demanding environment where retaining key personnel is vital.
Future Tracking Points
Investors and analysts will likely monitor the vesting schedules and actual exercise of these stock options. Tracking the total number of outstanding shares and potential impacts on earnings per share (EPS) in future filings will be important. Monitoring employee retention rates will help gauge the program's effectiveness, alongside management commentary on the strategic value of these ESOPs and their expected performance impact.