Eternal Q1 Results Review: Blinkit Boom Or Profit Problem? Why Brokerages Are Divided On Future Prospects
Zomato’s parent company reported a 23% quarter-on-quarter rise in revenue to Rs 7,167 crore in the April-June quarter, beating estimates of Rs 6,624 crore.
Ebitda rose 60% to Rs 115 crore, but missed the Rs 179 crore estimate pegged by Bloomberg. Margin came in at 1.6%, compared with expectations of 19.2%. Net profit fell 36% from the previous quarter to Rs 25 crore, missing consensus forecasts of Rs 106.8 crore, anticipated by Bloomberg.
Brokerages’ Mixed Reaction
UBS retained a Buy rating on Zomato and maintained its price target at Rs 315, calling the results ‘healthy across the board’ despite the bottom-line miss.
‘Blinkit growth and margins were ahead of our expectations,’ UBS said. ‘Quick Commerce revenue grew 40% QoQ (155% YoY), beating our estimates by 22%.’
While acknowledging that consolidated adjusted Ebitda missed estimates by 26%, UBS pointed to improving Quick Commerce unit economics and stable delivery volumes.
‘Food Delivery margins declined slightly to 4.2%, impacted by seasonal factors like festival-driven delivery constraints and bad weather,’ the brokerage noted.
Citi maintained its Buy call and raised its target price from Rs 290 to Rs 320, citing the improving outlook of Blinkit.
‘Quick Commerce delivered intact growth momentum with lower losses,’ Citi stated. ‘Adjusted Ebitda for Blinkit surprised positively.’
Bernstein called Q1FY26 a ‘robust quarter’ for Zomato and raised its target price from Rs 280 to Rs 320, reiterating an Outperform rating.
‘The beat was driven by dark store expansion and narrower than expected adjusted Ebitda losses,’ Bernstein said. ‘Quick Commerce GOV grew 140% YoY, supported by the addition of 243 stores.’
Zomato’s move to a 1P inventory model and plans to scale to 2,000 Blinkit stores by December 2025, with visibility up to 3,000, were key positives for Bernstein.
‘Zomato is poised to benefit from the structural shift to quick commerce,’ the brokerage added. ‘It remains our top pick in the Indian internet space.’
Contrasting Views
In contrast, Macquarie retained its Underperform rating with a target price of Rs 150, expressing concern over both valuation and the sustainability of Blinkit’s economics.
‘While Blinkit showed explosive growth and losses narrowed, steady-state economics are yet to be proven,’ the note stated. ‘We estimate the current share price implies a $15 billion valuation for Blinkit — which appears stretched.’
Macquarie was especially critical of Food Delivery, ‘Growth in this segment moderated to 13% YoY, missing expectations, with a mild margin compression,’ the brokerage said.
The firm said that competitive intensity in quick commerce may remain high, ‘We expect a prolonged period of losses due to lower throughput and rising input cost inflation, despite improving optics in the short term.’
Macquarie also flagged a 60% YoY increase in employee costs, now accounting for 12% of revenue, and higher-than-forecast losses in newer segments like Bistro.
