Eternal has outlined its strategic capital allocation plans, indicating increased investment per store in the coming quarters. The company's guidance reflects a focus on operational enhancement through technology integration and store format expansion.

Capital Expenditure Strategy

The company expects capital expenditure per store to increase in upcoming quarters, driven by two primary factors. Investments in automation technology represent a key component of this enhanced spending, as Eternal seeks to modernize its operational infrastructure. Additionally, the company is pursuing a trend towards larger store sizes, which requires higher initial capital investment per location.

Working Capital Management

Despite increased capital expenditure, Eternal projects maintaining efficient working capital management. The company expects net working capital days to remain within an 18-day range, demonstrating continued operational efficiency. This metric indicates the company's ability to manage inventory, receivables, and payables effectively while pursuing expansion and modernization initiatives.

Return on Capital Targets

Eternal has set ambitious profitability targets, aiming for a return on capital employed (ROCE) north of 40%. This target reflects the company's confidence in generating substantial returns from its increased capital investments in automation and larger store formats.

The guidance indicates Eternal's strategic approach to balancing growth investments with operational efficiency, positioning the company for enhanced performance through technological advancement and optimized store formats.

Eternal management has outlined its strategic roadmap for the District business segment, providing clear guidance on expected performance improvements and profitability targets during a recent conference call.

District Business Turnaround Strategy

The company's leadership expects losses in the District business to begin decreasing sequentially starting from Q3 FY26. This timeline indicates a structured approach toward improving the segment's financial performance over the coming quarters.

Management Expectations

The management's guidance reflects confidence in the District business's potential for improvement. The four to six-quarter timeline for achieving breakeven suggests a measured approach to operational efficiency and revenue optimization in this segment.

This guidance provides stakeholders with clear expectations regarding the District business's trajectory, indicating management's commitment to transforming this segment from a loss-making operation to a breakeven position within the specified timeframe.