Blinkit powers Eternal's Q1 growth as taxes, investments weigh on profit

Eternal Ltd's June-quarter (Q1FY27) results underscored how rapidly Blinkit is reshaping the company. Revenue surged five-fold as the quick commerce business scaled aggressively, but higher taxes and continued spending on newer businesses kept profit growth subdued.

The Gurugram-based company reported consolidated revenue of ₹20,211 crore for Q1, up 182% from a year earlier and ahead of the ₹19,947 crore average estimate of 24 analysts polled by Bloomberg. Net profit rose 5% to ₹92 crore but missed the ₹300 crore consensus estimate based on 21 analyst forecasts, as a higher tax outgo and investments in newer businesses offset stronger operating profits from food delivery, quick commerce and Hyperpure.

Blinkit remained the company's largest business by revenue, contributing about 77.5% of consolidated revenue, up from 76.5% in the March quarter. Food delivery accounted for 15.3%, down from 15.8%, while Hyperpure contributed 5.1%, compared with 5.7% in the preceding quarter.

Blinkit significantly boosted Eternal's Q1 growth by generating a revenue surge of over six-fold year-on-year, contributing about 77.5% of the company's consolidated revenue.

Eternal's net profit for Q1FY27 rose 5% to ₹92 crore, which fell short of the ₹300 crore consensus estimate due to higher tax expenses and continued investments in newer businesses.

Eternal is focusing on assortment expansion, geographical expansion, and demand densification to drive long-term growth in its quick commerce business.

Intense competition from players like Swiggy and Zepto has increased pressure on Blinkit, but it has maintained customer retention and continues to grow by investing in infrastructure rather than solely competing on pricing.

Investors are advised to be cautious; while Eternal shows strong growth potential, current valuations suggest that execution must remain ahead of expectations to justify buying at this time.

Eternal's shares closed 1.15% lower at ₹283.40 on the BSE on Wednesday.

Blinkit's revenue jumped more than six-fold year-on-year to ₹15,664 crore, aided by Eternal's transition to the inventory-led (1P) model. Net order value (NOV)—the value of orders after cancellations, refunds and discounts—rose 86% to ₹17,132 crore.

Adjusted Ebitda improved for the fifth consecutive quarter to 0.6% of NOV, translating into a profit of ₹102 crore versus a loss of ₹162 crore a year earlier.

“We continue to focus our efforts on our three pillars of long-term growth—assortment expansion, geographical expansion, and demand densification. This quarter, we continued to make progress on assortment expansion in the top eight cities and geographic expansion in the next 30,” said Albinder Dhindsa, group chief executive officer (CEO) of Eternal, in the shareholder letter.

The company said it will roll out “gourmet” stores across select locations in the top eight cities to drive premiumization through curated premium brands. Mint was the first to report on the plans.

Blinkit fulfilled 156 million orders during the quarter and added 200 net new dark stores, taking its network to 2,443. Average NOV per store rose to about ₹11 lakh a day, well above the company's earlier long-term estimate of ₹7 lakh.

Management reiterated plans to keep investing aggressively in Blinkit, saying the business can generate a pre-tax ROCE of around 42% at steady state. Eternal has invested about ₹3,000 crore over the past four years to build nearly 19 million sq. ft of quick commerce infrastructure across more than 300 cities.