Eternal Limited , formerly known as Zomato, has reported significant improvements across multiple business segments, with particularly strong performance in its quick commerce division. However, the company is also facing several challenges that may impact its short-term growth prospects and has decided against launching a separate budget-focused food delivery app.

Food Delivery Segment Shows Steady Growth

The company's food delivery segment demonstrated solid progress, with a 14% year-over-year growth in November. More notably, profitability in this segment reached a record high of 5.3%, up from 5.0% in the previous quarter, indicating improved operational efficiency.

Quick Commerce Sees Exceptional Growth

Eternal's quick commerce business exhibited remarkable performance:

• 137% year-over-year growth in November
• 27% quarter-over-quarter growth, marking the best performance in 10 quarters
• Expansion of network with 272 new stores added
• Gain of 3.9 million average monthly active customers

The company's transition to an inventory ownership model in quick commerce is nearing completion, with approximately 80% of November's business using its own inventory model.

Financial Metrics Show Improvement

Eternal's financial metrics demonstrated positive trends:

• Quarterly losses reduced to INR 156.00 crore from INR 162.00 crore in the previous quarter
• Adjusted EBITDA margin improved from -1.8% to -1.3% in November

Segment-wise Performance

Challenges and Headwinds

Despite the strong performance in key segments, Eternal is facing several challenges that could impact its short-term growth:

• Weaker consumer spending patterns
• Increased competition from rapid delivery services
• Unstable weather conditions affecting operations

These factors may pose obstacles to the company's growth trajectory in the near future.

No Plans for Separate Budget App

Eternal Ltd has announced it has no immediate plans to launch a separate budget-focused food delivery app, unlike competitors Swiggy Ltd and Rapido. While Swiggy operates 'Toing' in select Pune locations targeting students, and Rapido runs 'Ownly' across select Bengaluru areas, Eternal is taking a different approach.

Co-founder Deepinder Goyal stated that the company prefers maintaining a streamlined operational structure and is willing to be the last mover in this space. Instead of launching a separate app, Eternal is addressing budget-conscious consumers by reducing the minimum order value for free delivery to Rs 99 for Zomato Gold users, down from Rs 199. The company cited that launching another app would significantly increase organizational complexity.

Looking Ahead

While the significant growth in quick commerce and the improved profitability in food delivery indicate that Eternal is successfully executing its business strategy, the company will need to navigate the identified challenges effectively. The company's focus on expanding its quick commerce network and transitioning to an inventory ownership model may continue to drive growth, but the impact of external factors will need to be closely monitored.

Investors and market watchers will likely keep a close eye on how Eternal maintains its growth momentum, addresses the current headwinds, and further improves its profitability metrics across all segments. Additionally, the company's decision to forgo a separate budget app in favor of enhancing its existing offerings will be an interesting strategy to watch in the competitive food delivery market.

Eternal Limited (formerly Zomato Limited) has reported a significant leap in its financial performance for the second quarter of fiscal year 2026, alongside plans for a new corporate social responsibility (CSR) initiative.

Financial Highlights

The company's consolidated revenue from operations saw a remarkable increase of 183% year-over-year, reaching INR 13,590.00 crores in Q2 FY2026, compared to INR 4,799.00 crores in the same quarter last year. This substantial growth underscores the company's expanding market presence and operational efficiency.

For a clearer picture of the financial performance, here's a breakdown of the key figures:

Despite the impressive revenue growth, the company's consolidated profit for Q2 FY2026 stood at INR 65.00 crores, a decrease from INR 176.00 crores in Q2 FY2025. This decline in profit amidst revenue growth may indicate increased operational costs or strategic investments for future growth.

Half-Year Performance

For the first half of FY2026, Eternal Limited's revenue reached INR 20,757.00 crores, marking a 130.51% increase from INR 9,005.00 crores in the previous year. The half-yearly profit, however, decreased to INR 90.00 crores from INR 429.00 crores in the same period last year.

New CSR Initiative

In a significant move towards corporate social responsibility, Eternal Limited's Board has approved the incorporation of Eternal General Service Foundation. This wholly-owned subsidiary will focus on charitable and social welfare activities, including:

• Hunger relief
• Healthcare
• Education
• Environmental sustainability

The foundation will be established with a paid-up capital of INR 10.00 lakh, demonstrating the company's commitment to giving back to society.

Ongoing Challenges

Eternal Limited continues to face GST disputes totaling INR 441.00 crores related to delivery charges. However, the management maintains confidence in their position, believing they have a strong case on merits.

Segment Performance

The company's financial results reveal strong performance across various segments:

1. India food ordering and delivery: Revenue of INR 2,483.00 crores
2. Hyperpure supplies (B2B business): Revenue of INR 1,023.00 crores
3. Quick commerce: Revenue of INR 9,891.00 crores
4. Going Out: Revenue of INR 189.00 crores

The quick commerce segment showed exceptional growth, contributing significantly to the overall revenue increase.

Conclusion

Eternal Limited's Q2 FY2026 results demonstrate the company's ability to drive substantial revenue growth, particularly in its quick commerce segment. While profitability has seen a temporary decline, the company's strategic initiatives, including the new CSR foundation, indicate a focus on long-term sustainable growth and social impact. Investors and market watchers will likely keep a close eye on how Eternal Limited balances its rapid expansion with profitability in the coming quarters.