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Blinkit's Rise Drives Growth, But Profitability Remains Key
Eternal is set for strong revenue growth in its March quarter, with an 11% increase expected sequentially. This expansion is thanks to Blinkit's aggressive scaling and steady improvements in the core food delivery business's profit margins. Analysts expect better efficiency, meaning the company can invest in growth while improving financial results. Despite a challenging competitive environment in quick commerce, the steady progress in food delivery, supported by higher platform fees and more effective earning strategies, is expected to provide a solid earnings foundation.
Quick Commerce Race: Blinkit Battles for Market Share
The Indian quick commerce market is a fiercely contested arena, projected to reach approximately USD 3.65 billion in 2026, with a growth rate of 12.74% annually through 2031. Blinkit, alongside rivals like Swiggy Instamart and Zepto, operates in this high-growth, high-competition space, with Blinkit holding an estimated 45% market share as of FY25. However, this rapid expansion presents significant profit challenges. While Blinkit added a record 294 net new stores in Q4 FY25 and is on track to reach 2,000 by December 2025, whether it can maintain profitability remains a key question. Competitors like Swiggy are also investing heavily, with Swiggy Instamart operating over 1,000 dark stores.
In the food delivery sector, while revenue growth has been substantial, the landscape is evolving. The market generated US$13.4 billion in gross output in 2023-24. However, revenue growth has not always translated to profits, with Swiggy's operating loss doubling due to quick commerce spending. Eternal's food delivery segment saw revenue grow 21% year-on-year in FY25, driven by a 20% rise in Net Order Value (NOV). Morgan Stanley lowered its EBITDA estimates, citing slower profit improvement, highlighting ongoing pressure.
Analyst sentiment for Eternal (ZOMATO) remains mixed but leaning positive. The consensus 12-month price target stands between Rs 255-290, implying potential upside from current levels. However, the stock's valuation is notably high, with a trailing P/E ratio around 541 as of April 2026. This high valuation suggests significant future growth is already priced in, making execution critical.
Profit Pressure Mounts as Blinkit Expands
The aggressive expansion of Blinkit, while driving revenue, presents a significant risk to profitability. Intense competition, including aggressive discounting and a focus on rapid scaling, strains margins. The sector is characterized by high operational costs, and the drive for market share can lead to unsustainable pricing strategies. Eternal's net profit in Q4 FY25 saw a 78% year-on-year drop to Rs 39 crore, despite a 64% revenue increase, largely due to a 68% rise in total expenses, including those for Blinkit's expansion. The company's profit margin in food delivery, while improving year-on-year, saw a slight quarter-on-quarter dip in Q4 FY25. Furthermore, a high P/E ratio of over 1000 indicates that the stock is trading at a premium, making it vulnerable to any signs of operational missteps or slower-than-expected growth.
Outlook: Balancing Blinkit's Growth With Sustainable Profit
Eternal's outlook depends on balancing aggressive growth initiatives, especially with Blinkit, against consistent profitability. Analysts anticipate continued growth in both food delivery and quick commerce segments, but Blinkit's profit margin will be a key determinant of overall financial performance. Analyst ratings favor a 'Buy,' with an average 12-month price target around ₹359.06, indicating potential upside. Investors will closely monitor Blinkit's store expansion targets and profitability milestones, alongside how effectively Eternal continues to earn from its core food delivery business, to gauge its path toward more consistent earnings growth.