Eternal Ltd (formerly known as Zomato Ltd) has reported robust growth in its first quarter results, with significant developments across its business segments. The company also announced strategic changes to its quick commerce operations.

Revenue and Profitability

For Q1, Eternal Ltd posted consolidated revenue from operations of Rs 7,167.00 crore, marking a substantial 70.4% year-over-year increase from Rs 4,206.00 crore in the same quarter last year. The company's net order value (NOV) of B2C businesses grew 55% year-over-year to Rs 20,183.00 crore.

Despite the strong top-line growth, the company's profitability took a hit. Profit for the quarter stood at Rs 25.00 crore, down 90.1% from Rs 253.00 crore in the same quarter last year. This decline was primarily attributed to continued investments in quick commerce and going-out segments.

Segment Performance

Quick Commerce

The quick commerce segment emerged as a standout performer, with its NOV exceeding that of food delivery for the first time in a full quarter. Quick commerce revenue grew 155% year-over-year to Rs 2,400.00 crore.

Food Delivery

Food delivery NOV growth slowed to 13% year-over-year, which the company expects to be the bottom, with growth likely to trend towards 20% by FY27.

Hyperpure B2B

The Hyperpure B2B business saw revenue growth of 89% year-over-year, reaching Rs 2,295.00 crore. However, the company anticipates a decline in this segment in the coming quarters due to strategic changes in the quick commerce business model.

Strategic Shifts and New Initiatives

Eternal Ltd announced a significant change in its quick commerce business model, transitioning from a marketplace to an inventory ownership model over the next 2-3 quarters. This shift is expected to result in about 1 percentage point margin expansion over time.

The company also revealed plans to launch a food preparation and delivery service through a new subsidiary, Blinkit Foods Ltd, to compete in the quick commerce food space.

In an effort to promote sustainability, Eternal Ltd launched 'Greening India', an agroforestry initiative aimed at planting over 2.5 million trees across 10,000 acres of farmland.

Leadership Changes

Eternal Ltd introduced a 'Rotational Leadership' model, particularly for its Zomato business. As part of this, Aditya Mangla, with a background in product and engineering, will lead the Zomato business for the next two years.

Outlook

While facing some near-term profitability challenges, Eternal Ltd remains optimistic about its long-term prospects. The company expects its quick commerce business to achieve 5-6% Adjusted EBITDA margins and a return on capital employed of at least 40% in the long run.

As Eternal Ltd continues to evolve its business model and explore new growth avenues, investors will be keenly watching how these strategic shifts impact the company's financial performance in the coming quarters.

Eternal Ltd. , the parent company of food delivery giant Zomato, reported a mixed bag of financial results for the first quarter. While the company's consolidated net profit saw a significant decline, revenue growth remained strong, driven by its various business segments.

Profit Decline

Eternal Ltd. reported a consolidated net profit of ₹25.00 crore for the quarter, marking a 36% sequential decline from the previous quarter. This figure fell short of analyst estimates, which had projected a profit of ₹106.80 crore for the quarter.

Revenue Growth

Despite the profit dip, the company's revenue from operations showed robust growth:

• Consolidated revenue increased by 23% to ₹7,167.00 crore, up from ₹5,833.00 crore in the previous quarter.
• On a year-over-year basis, revenue grew by an impressive 70% from ₹4,206.00 crore in the same quarter of the previous fiscal year.

Segment Performance

The company's performance across its various business segments was as follows:

EBITDA and Margins

Eternal Ltd.'s adjusted EBITDA rose by 60% to ₹115.00 crore. However, the adjusted EBITDA margin as a percentage of Gross Order Value (GOV) declined from 1.2% in the previous quarter to 1% in the current quarter.

Quick Commerce Growth

The quick commerce segment, which includes Blinkit, showed significant growth:

• Quick commerce NOV (Net Order Value) exceeded food delivery NOV for the first time in a full quarter.
• The segment is now the largest B2C business, contributing to almost half of the annualized NOV.
• On an annualized basis, Eternal's B2C businesses are approaching $10 billion in annual NOV.

New Initiatives

Eternal Ltd. announced the incorporation of Blinkit Foods, a new wholly-owned subsidiary with an authorized share capital of ₹1.00 crore and a paid-up capital of ₹10.00 lakh. This new entity will engage in food services, including innovation, preparation, sourcing, sale, and delivery of food to customers.

Market Response

Despite the profit decline, Eternal's share price gained 4% following the results announcement, indicating that investors may be focusing on the company's strong revenue growth and expansion in the quick commerce segment.

Management Commentary

Deepinder Goyal, CEO of Eternal Ltd., commented on the results: "We are excited about the growth in our quick commerce business, which has now become our largest B2C segment. While profitability saw a temporary dip, we believe our investments in growth will yield strong returns in the coming quarters."

The company remains focused on expanding its market share across its various business segments, with a particular emphasis on the rapidly growing quick commerce sector.