Eternal , the parent company of popular food delivery platform Zomato, is set to announce its Q1 earnings on July 21. Despite projections of strong revenue growth, analysts anticipate a significant year-on-year decline in profit after tax (PAT) for the quarter.

Profit Projections

Brokerages estimate that Eternal's Q1 PAT could see a substantial decrease of 69-89% compared to the same period last year. This decline is primarily attributed to ongoing losses in Blinkit and increased costs in the Going Out business segment. PAT estimates from four brokerages range between Rs 28.00 crore and Rs 78.00 crore.

Revenue Expectations

Despite the projected drop in profits, Eternal's revenue is expected to show robust growth:

• Overall revenue growth: 57-59% year-on-year
• Blinkit: 113% year-on-year growth
• Hyperpure: 75% year-on-year growth
• Food delivery: 18% year-on-year growth

EBITDA Outlook

Earnings before interest, taxes, depreciation, and amortization (EBITDA) are anticipated to improve on a quarter-on-quarter basis. However, a year-on-year decline is expected, largely due to Blinkit's losses, which are estimated to be around Rs 180.00 crore.

EBITDA margins are forecasted to range between 1.90% and 2.80%. While this represents a decrease from the previous year, it shows an improvement from the preceding quarter.

Key Focus Areas

Investors and analysts will be closely watching several key aspects of Eternal's Q1 results:

1. Blinkit's revenue contribution
2. Cost structure of the food delivery business
3. Gross Merchandise Value (GMV) growth
4. Management's commentary on store expansion plans
5. Timelines for achieving profitability across different business segments

As Eternal continues to navigate the competitive food delivery and quick commerce landscape, these results will provide crucial insights into the company's financial health and growth trajectory.

Financial Data Overview

The upcoming earnings announcement will be crucial for investors to assess Eternal's progress in balancing growth with profitability across its diverse business segments.

Eternal Ltd. , the parent company of quick commerce platform Blinkit, is set to implement a significant change in its business strategy. Starting September 1, Blinkit will transition from a marketplace model to an inventory-led business model, a move that is expected to have positive implications for the company's financial performance.

Anticipated Financial Impact

The shift in Blinkit's operational model is projected to yield substantial benefits for Eternal Ltd.:

• Margin Improvement: The company anticipates an enhancement in Ebitda (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins ranging from 50 to 110 basis points.
• Path to Profitability: This strategic pivot is expected to accelerate Blinkit's journey towards profitability, with the potential to achieve Ebitda break-even by the third quarter of fiscal year 2024 (Q3 FY24).

Analyst Perspective

JM Financial, a prominent financial services firm, has expressed a positive outlook on Eternal Ltd.'s stock following this announcement:

• Rating: JM Financial maintains a 'buy' rating on Eternal Ltd.'s stock.
• Target Price: The firm has set a target price of Rs 320.00 for the stock.

This optimistic stance from JM Financial suggests confidence in the potential success of Blinkit's new business model and its positive impact on Eternal Ltd.'s overall performance.

Strategic Implications

The transition to an inventory-led model represents a significant shift in Blinkit's operational strategy. This move is likely aimed at:

1. Improving control over product quality and availability
2. Enhancing operational efficiency
3. Potentially reducing costs associated with third-party sellers

As Blinkit implements this new model, investors and industry observers will be keenly watching its impact on the company's financial metrics and market position in the competitive quick commerce sector.

Eternal Ltd.'s decision to pivot Blinkit's business model underscores the dynamic nature of the e-commerce and quick commerce landscapes, where companies must continuously innovate to improve profitability and maintain a competitive edge.