Eternal (formerly Zomato Limited) has reported no deviation in the utilization of proceeds from its qualified institutions placement (QIP), according to the company's monitoring agency report for the quarter ended September 30. The report, issued by ICRA Limited, details the allocation and usage of the Rs 8,436.12 crore net proceeds raised through the QIP in November.

Allocation of Funds

The QIP proceeds have been allocated across four key areas:

Utilization Progress

As of September 30, Eternal has utilized Rs 2,945.61 crore of the total funds, with Rs 5,490.51 crore remaining unutilized. The company has deployed the unutilized proceeds in various instruments, including:

• Fixed deposits
• Government securities
• Liquid funds

These investments are yielding returns ranging from 5.75% to 8.14%.

Project Timelines

The company reports that all projects related to the QIP proceeds remain on schedule, with completion timelines extending from FY26 to FY28.

Monitoring Agency's Statement

ICRA Limited, the appointed monitoring agency, has confirmed that there has been no deviation from the stated objects of the issue. This assessment aligns with the company's commitment to transparent and efficient use of the raised capital.

Investor Implications

For investors, the report provides reassurance that Eternal is managing the substantial QIP proceeds in line with its stated intentions. The diversified allocation of funds across operational expansion, marketing, and technology development suggests a balanced approach to growth.

The investment of unutilized funds in a range of instruments demonstrates prudent financial management, ensuring that idle capital continues to generate returns while awaiting deployment.

Bistro by Blinkit Business Transfer

In a separate development, Eternal announced that its wholly owned subsidiaries Blink Commerce Private Limited (BCPL) and Blinkit Foods Limited (BFL) have entered into a business transfer agreement. The Bistro by Blinkit quick food service business will be transferred from BCPL to BFL for INR 57 crores through a slump sale on a going concern basis.

Key details of the transfer include:

• The transfer is part of internal restructuring aimed at developing the quick food service business under BFL.
• The Bistro Business generated revenue of INR 0.20 crore in FY 2024-25, representing 0.005% of BCPL's revenue and 0.002% of Eternal's standalone revenue.
• The business has a net worth of INR 16 crore as of March 31.
• The agreement was signed on October 16, with completion expected within 30 days.
• BFL was incorporated on August 18, specifically to engage in quick food service business under the Bistro by Blinkit brand.
• The transaction is classified as a related party transaction conducted at arm's length.

As Eternal continues to execute its growth strategy and internal restructuring, stakeholders will likely keep a close eye on the impact of these investments and organizational changes on the company's market position and financial performance in the coming quarters.

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.